( 'OMPX.I >f K NTS OF E ])KYDKX, PRESIDENT Paris Exposition of Nineteen Hundred. HISTORY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (INDUSTRIAL INSURANCE) 1875-1 BY FREDERICK L. HOFFMAN, F. S. S. STATISTICIAN OF THE PRUDENTIAL INSURANCE COMPANV OF AMERICA PRUDENTIAL PRESS 1900 COPYRIGHT 1900, BY THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. PREFACE. THIS work has been prepared at the request of the United States Commissioner to the Paris Exposition of 1900, as part of an exhibit of charts, diagrams and statistics illus- trating fully the methods and results of Industrial insurance in the United States, as represented in the history of The Pruden- tial Insurance Company of America. The time at my command for the preparation of this work having been very limited, I can hardly hope to have succeeded in presenting the subject in all its essential aspects to the full satisfaction of the reader, but every effort has been made to meet ordinary requirements for informa- tion and data on a subject here, for the first time, dealt with on a somewhat extensive scale. In view of the fact that The Pru- dential Insurance Company of America was the first company organized in this country for the transaction of an Industrial business on the plan of The Prudential Assurance Company of England, I believe that it can be said, with perfect justice, that the history of The Prudential is the history of American Industrial insurance ; for in all measures, methods and results, the Company has not only had its proper share, but it has ever made the most determined effort to hold the first place among American life com- panies, as a progressive institution vitally interested in everything tending to make the business with which its name is inseparably associated the most successful of its kind, and to offer the most satisfactory form of insurance to the people, who now, to the extent of more than three and a half millions, are its patrons and policy-holders. I have been compelled, for want of space, to limit myself to the barest recital of the historical facts pertaining to (v) vi PREFACE. the early history of the Company itself, and practically everything of a personal character relating to Mr. John F. Dryden, Dr. Leslie D. Ward and other early and present officers of the Company has been omitted to allow for as wide a discussion of general facts as possible. I feel very keenly the imperfect manner in which I have done justice to the men to whose energy, skill and abiding faith the Prudential Company and Industrial insur- ance in general owe so large a share of the wonderful success which has been achieved, but under the circumstances referred to, no other course was possible without injury to the under- taking as a whole. For similar reasons I have been compelled to deal very briefly with the early history of workingmen's associations for life-insur- ance purposes, with the worthy object of providing for uncertain contingencies by means of fraternal associations, gilds, burial clubs or friendly societies, from the latter of which the present form of Industrial insurance is able to trace its origin by an un- broken chain of historic evidence. This limitation is much to be regretted, since many of the works dealing with the subject, or its related aspects, are difficult of access to the general reader, while others are practically out of print, and to be found only in the larger libraries of New York and Boston. For a complete understanding of the causes which have been productive of such vast results in the development of modern Industrial insurance, the reader should make himself familiar with the works of Cor- nelius Walford on Gilds and Friendly Societies, and with the large number of Parliamentary reports on Friendly Societies and Indus- trial Insurance Companies, on Old-Age Pensions, Compulsory Insurance and the Life Insurance of Children, published during the period 1825-1899. To these must be added the exceedingly valuable paper of Mr. Harben on ' ' The History of Industrial Assurance," published in 1871 ; "The History of The Prudential Assurance Company," published in 1880 ; Baernreither's work on * ' English Associations of Workingmen " ; T. Mackay on ' ' The PREFACE. Vll English Poor" and ''Insurance and Saving"; and C. H. E. Rea's paper on "Some Observations on Industrial Assurance," published in the Journal of the Institute of Actuaries, July, 1898. For this country the information is much more limited, but the student should not fail to read the address of Mr. Dryden before the Massachusetts Legislature in 1895, and the March, 1898, number of the Charities Review, containing an excellent paper 011 the subject of Industrial Insurance by Mr. Haley Fiske, the Vice-President of the Metropolitan Life Insurance Company. A valuable address on Industrial Insurance was made by Mr. John R. Hegeman, the president of the last-named company, at the annual meeting of Insurance Commissioners at Milwaukee, September, 1898, but the paper, not being in general circulation, must be applied for at the office of the company. Other infor- mation and minor publications can be obtained free on application to any one of the larger Industrial companies, while the general subject of workingmen's insurance can best be studied in Mr. Willoughby's "Workingmen's Insurance," and the United States Labor Report on ' ' Compulsory Insurance in Germany. ' ' Had space permitted, I would have added to this volume a bibliography of works and articles in periodical literature, but the few references given will indicate sources from which valuable material for the study of this most modern form of life insurance can be derived. Some of the more important articles can easily be traced through Poole's index of periodical literature, under the titles of Insurance, Life Insurance, Industrial Insurance, Child Insurance, etc., while a brief discussion of controversial matter can be found in "The Development of Thrift," by Miss Mary Willcox Brown (New York, 1899). This work would have been impossible but for two facts, which may be mentioned in explanation of some points other- wise likely to be imperfectly understood. The writer has, for a number of years, been engaged in the collection of material for a larger and more complete work on Industrial insurance in this viii PREFACE. and other countries, and from the partly completed manuscript of the larger work this sketch has been prepared to meet the wishes of the United States Commissioner to the Paris Exposition. It is, therefore, more than probable that within a few years this book will be followed by another of a more satisfactory nature, supple- menting many matters here imperfectly dealt with. Another factor of some importance, and one which is only too often absent in similar discussions of social and economic problems, is that the writer has had many years of actual field experience, having commenced his connection with the business as an agent, succes- sively filling the higher positions of assistant and superintendent in charge of districts in the East, West and South. I have thus had exceptional opportunities to verify field observations by extensive office investigations, and I may add that there is not in this work a single statement of fact or theory which has not the support of personal observation and experience. On account of the peculiar nature of the business of Industrial insurance, the relations of agents to policy-holders are so very close and personal that there is little of importance affecting the daily life and struggle of working people that fails to come to the knowledge of the intelligent observer who, week after week, calls upon the same people for the purpose of collecting the weekly premiums. Their difficulties, trials, hardships and final successes are known to him ; he is their friend and they are his friends, and he is often their adviser, counsellor and aid in emergen- cies. Coming in such close contact with hundreds of thousands of our wage-earners of all types and nationalities, engaged in every occupation, the Industrial agent has opportunities for study and observation which fall to the lot of only the very few, and I can not but think that in the light of this personal experience I may be pardoned for having at times expressed myself with exceptional emphasis in favor of the character of our industrial population and its struggle for economic independence. I am convinced that if those who think ill of the masses, and PREFACE. IX who see in their humble endeavors little deserving of praise and much to blame, would go and really live among the plain people, they would soon realize that beneath all of the apparent sordidness and selfishness there lies much nobility of effort and of aim. The more I have seen of working people, the more I have learned to respect their motives, their efforts and the results of their struggle, and the less, I acknowledge with shame, do I think of the efforts and results of those who, under vastly better conditions, with far greater opportunities, fall materially short of what, by a reasonable standard, we have a right to expect. In the preparation of this volume I have been materially aided by the editors and publishers of a number of our more im- portant insurance publications, especially Mr. Walter S. Nichols, of the Insurance Monitor; Mr. Clifford Thomson, of the Spectator; Mr. J. A. Fowler, of the Exchange and Review ; and the editor of the Weekly Underwriter, who have been good enough to ex- tend to me the loan of their complete files, extending in some instances over a period of more than fifty years. I am also under obligations to the Insurance Commissioners of the various States for valuable data and information relative to the results of official investigations into the practice of Industrial insurance ; to the Health and Charity officials of nearly all the States and large cities for valuable statistics and data indirectly relating to the business ; to Mr. Julius Clarke, of West Newton, Mass., and Mr. John B- Clark, of New Haven, Conn., for infor- mation relating to the early history of the business in this country ; to Mr. John K. Gore, the Actuary of The Prudential, and Mr. F. S. Crum, my associate in office, for the reading of the manuscript of this work and valuable aid and suggestions which have mate- rially diminished the possibility of occasional errors and uninten- tional misstatements. But most of all, I am under a debt of grati- tude to Mr. John F. Dry den and Dr. Leslie D. Ward, respectively the President and Vice-President of The Prudential, for complete freedom in making use of the records and archives of the Company X PREFACE. and for every possible aid in making this work one of interest and value to the student of Industrial insurance and its relation to the general progress of the industrial population of this coun- try. I trust that I have discharged my duty to the satisfaction of those into whose hands this volume may fall ; that I have not materially fallen short in my effort to do justice to the founders of the Company, who have made Industrial insurance the busi- ness success of the age ; and that I have done equal justice to the millions of honest, high-minded men and women who are the patrons, as they are the policy-holders and true makers of The Prudential Insurance Company of America. F. L. H. 761 Broad Street, Newark, N. J. TABLE OF CONTENTS. CHAPTER. PAGK. I. INTRODUCTION, i II. EARLY WORKINGMEN'S INSURANCE IN AMERICA, . 6 III. INDUSTRIAL INSURANCE BEFORE 1874, 20 IV. INDUSTRIAL INSURANCE IN AMERICA IN 1874, . . 39 V. THE PRUDENTIAL FRIENDLY SOCIETY, 1875, ... 55 VI. THE PRUDENTIAL FRIENDLY SOCIETY, 1876-1877, . 84 VII. THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1877-1879, . . .' 94 VIII. THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1879-1880, 108 IX. THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1881-1884, 133 X. THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1885-1888, 158 XI. THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1889-1891, 175 XII. THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1892-1893, 187 XIII. THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1894-1896, 202 XIV. THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1897-1898, 235 XV. THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1899, 266 XVI. SUMMARY OF CONCLUSIONS AND RESULTS, .... 284 INDEX, 319 (xi) PORTRAITS AND ILLUSTRATIONS. OPPOSITE PAGE. JOHN F. DRYDEN, President, i JULIUS I/. CLARKE AND JOHN E. CLARK, 48 HOME OFFICE OF THE PRUDENTIAL FRIENDLY SOCIETY, 1875-1878, 55 FIRST APPLICATION RECEIVED BY THE PRUDENTIAL FRIENDLY SOCIETY, 58 LESLIE D. WARD, Vice- President, 69 FIRST INDUSTRIAL POLICY FORM USED BY THE PRU- DENTIAL INSURANCE Co. OF AMERICA, 96 HOME OFFICE OF THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1878-1883, 100 KDGAR B. WARD, Second Vice-President and Counsel, . 127 HOME OFFICE OF THE PRUDENTIAL INSURANCE Co. OF AMERICA, 1883-1892, 147 FORREST F. DRYDEN, Secretary, 183 PRESENT HOME-OFFICE BUILDINGS OF THE PRUDENTIAL INSURANCE Co. OF AMERICA, . . . 191 INDUSTRIAL POLICY FORM AT PRESENT IN USE BY THE PRUDENTIAL INSURANCE Co. OF AMERICA, 236 PAID-UP POLICY FORM AT PRESENT IN USE BY THE PRUDENTIAL INSURANCE Co. OF AMERICA, 238 INDUSTRIAL APPLICATION FORM AT PRESENT IN USE BY THE PRUDENTIAL INSURANCE Co. OF AMERICA, . 240 INDUSTRIAL AGENT'S AGREEMENT AT PRESENT IN USE BY THE PRUDENTIAL INSURANCE Co. OF AMERICA, 242 o OF TH UNIVERSITY HISTORY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. CHAPTER I. INTRODUCTION. The history of The Prudential Insurance Company is, in a large measure, the history of Industrial insurance in America, Founded in 1875 by Mr. John F. Dryden, the present President of the Company, it was the first organization of its kind to prac- tically demonstrate the possibility of extending the benefits of life insurance to the masses, and the first to demonstrate to the industrial population that life-insurance principles, properly applied, could be made to serve the useful purpose of providing for the burial expenses of every member of the family, in return for a small weekly charge collected from the house of the insured. Mr. Dryden was the first among a number of American insurance managers to put to a successful test the methods of the British Prudential Assurance Company, and the first to recognize the possibilities of family insurance on the Industrial plan in the United States. All efforts in this direction previous to 1875 had failed ; every variety of co-operative or other form of workingmen's insurance had been tried and found wanting, and, instead of acting as an incentive to savings and thrift, these forms of pseudo-insurance had acted as a direct discouragement, and, instead of tending to diminish pauperism and want, these organizations, on account of their inherent worthlessness, were partly responsible for an amount of out-door relief and public support in illness and at death such as has not been known (i) 2 HISTORY OF THE PRUDENTIAL. since Industrial insurance became an active factor in the social economy of the American population. Recognizing that ' ' Political Economy is concerned with the facts of industrial life ' ' and that ' ' this involves a treatment of past industrial life, the forces which have been at work and which have made it what it is to-day," * I have largely confined my sketch to a statement of the underlying causes making for the establishment of The Prudential and the subsequent development and present success of Industrial insurance in America. It has justly been said, by a great French writer on English history and civilization, that "Whoever attentively considers the English turn of mind will be struck by the fact of a twofold nature : on one side practical ability, and on the other the absence of general ideas and elevation of mind on purely theoretical questions," and, "whether we turn to works on history or juris- prudence or any other subject, we rarely find that the great fundamental causes of things have been investigated." These remarks of Guizot apply with special force to the history of life insurance and in particular to that modern branch of the business which is to-day, the English-speaking world over, known by millions of working people as " Industrial Insurance." With this idea in mind, the following sketch has been pre- pared as a contribution towards a better study of the all-important problem of life insurance for the masses and a better knowledge of a form of insurance which, though familiar to millions of the industrial population, is practically unknown to even the most thoroughly informed students of sociology and political economy. While Mr. Spencer could speak of Friendly Societies as the most familiar instances of co-operation among working people, and rightly included "certain other bodies of kindred natures, chiefly burial societies" and " Industrial Assurance Societies ; doing for the poor what the more conspicuous institutions for averaging the risks of fire, accidents, etc., do for the better off," t it is only too true that this form of insurance, of saving and thrift has almost completely escaped the notice of the economist and been practi- cally ignored by writers on what Mr. Spencer has so well defined as forms of * ' social structure. ' ' * Richard T. Ely, Problems of To-Day, p. 100. t Principles of Sociology, Vol. III., p. 556. INTRODUCTION. 3 Industrial insurance differs from ordinary level-premium life insurance in the following four essential points : first, the premiums are payable weekly, instead of being payable quar- terly, semi-annually or annually ; second, the premiums are collected from the house of the insured by an agent of the company, instead of being payable at the office of the company ; third, the amounts of insurance are adjusted to the unit pre- mium, instead of the premium being adjusted to the amount that is, in Industrial insurance certain amounts of insurance can be purchased for a premium of five cents per week or multiples thereof, while in Ordinary insurance the amount is in round numbers and usually in multiples of one thousand dollars ; fourth, every member of the family can be insured for a small premium, while in Ordinary insurance, as a rule, only the head of the family is insured for a proportionately large amount. In the sense of this definition Industrial insurance is prac- tically mass insurance, while Ordinary insurance is, in a measure, class insurance, and the popularity of the former and its extent may be attributed to the fact that, for reasons inherent in the four cardinal principles, the system provides for contingencies and acts as a protection against uncertainties which are not provided for by any other form of saving or of thrift. ^Combin- ing with all the elements of security of Ordinary level-premium companies a convenience or propinquity in the manner of paying the premiums from week to week out of weekly wages, the method of Industrial insurance has thus far been proven to be best adapted to the wants and convenience of the industrial population; hence the term ''Industrial," which has from the beginning distinguished, and properly so, this form of insurance from life insurance on the Ordinary plan for the more prosperous elements of the population. The business was called ' ' Industrial ' ' by the first company which attempted to develop the system in England, in 1849, that is, "The Industrial and General" ; and while most of the companies transacting this form of insurance are at the same time transacting an Ordinary business, often reaching vast proportions, the Industrial part of the business is always separately managed and separately valued, with its funds separately invested, similar to the manner in which the business and funds of English Fire and lyife companies are kept apart. 4 HISTORY OF THE PRUDENTIAL. Having defined the principles of Industrial insurance, I add here a brief definition of its immediate and remote objects, which will partly explain its wonderful success from a purely busi- ness standpoint of financial importance. The underlying purpose of Industrial insurance is to provide for the expenses of burial and the cost of the last illness of every member of the family, and thus make unnecessary the assistance of the State or of charitable agencies in meeting a call for funds at a time when such funds are needed most. The abhorrence of pauper support, especially for the burial of the dead, is a pronounced trait of every self- respecting man, and only those who are familiar with the life and the labor of the industrial masses can fairly grasp the deeper meaning of the abhorrence of a pauper burial of a member of the family in the potter's field. Only those who for years have come into intimate contact with the masses can understand the unwil- lingness of wage-workers, or what I have elsewhere called the industrial masses, to avail themselves of the dispensary doctor during the last illness of a father or a child ; hence the readiness or willingness on the part of the masses to make use of life insur- ance on the Industrial plan as a method of providing for these contingencies. It has been well said by E. Demolins that "a man who is conscious of his respectability is naturally inclined to increase it,"* and, as a first step in this direction, a pro- vision against pauper burial and pauper medical attendance must be looked upon as a most effective means to elevate or ameliorate the lot of the average man. To understand this trait for such it is among Anglo-Saxon peoples, it is necessary to take into account Germanic origins which have remained race traits up to the present time. To bury the dead was an ancient obligation, and even in the early days of the Northmen there is recorded a famous passage in the ' ' Kdda ' ' which mentions "the different deaths which men may die," and which contains the counsel and demand " That thou give the dead man burial wherever thou shalt find him." According to Tacitus, " Funerals among the Germans " of his day " were of the highest importance," and in the words of Mr. Gummere, from whose work I have just quoted, "Whatever is sanctioned by religion and dateless customs comes to be regarded as a virtue," and by the same author, in another passage, ' ' it seems reasonable to infer * Anglo-Saxon Superiority, p. 183. INTRODUCTION. 5 for the whole Germanic race a general sense of the immense im- portance of funeral-rites. ' ' * This respect for the memory of the dead became in time an obligation for survivors to make proper provision for the burial of the departed, and is met with among all peoples and at all times, but most so among the early Romans, the Germans and the English, where we find abundant proof of an ever-present recognition of the decent burial of the dead as a social duty which had to be discharged, even though other duties had, for the time being, to be ignored. In most of the charters of ancient associations, the Roman Collegia and the Gilds of the middle ages, provision was made for the burial of the dead as one of the most important duties to be discharged by one member of the association towards the other. After the destruction of the Gilds by Henry VIII., Friendly Societies and Burial Clubs came into existence, largely for the purpose of fulfilling one of the essential functions of the former Gilds that is, the proper burial of the dead. Out of these clubs and societies Industrial insurance was developed in England, the first company for the purpose of transacting such a business having been founded in 1849, under the name of the "Industrial and General." This company was absorbed in 1854 by the Prudential Assurance Company, which commenced the transaction of an Industrial business in that year, its attention having been called to the need for such an extension of insurance principles to the masses by a Parliamentary report on ' ' Assurance Associations" in 1853.! * Germanic Origins, pp. 306, 321, 322. f Report on Assurance Associations, London, 1853, P- y i- : "Your Com- mittee feel that the ground [s] hitherto occupied by these useful institu- tions have been comparatively limited and that their application is capable of a great extension, not only in the higher and middle classes of society, but also among the humbler classes, to whom it has recently been very considerably applied ; and that it is therefore very important that no check or impediment should be placed in the way of the further extension of this enterprise, not absolutely needful for the security of the public." HISTORY OF THE PRUDENTIAL. CHAPTER II. EARLY WORKINGMEN'S INSURANCE IN AMERICA. Briefly explained, the underlying purpose of Industrial insurance has its justification in an inherent trait of Anglo- Saxon peoples to make provision for the proper and respectful burial of the dead. Under the earlier forms of association, as Gilds, Fraternities or vSecret Orders, this object was accom- plished largely on the basis of status and a kindly spirit of brotherly regard, fully in harmony with the conditions of the time. During more recent years the condition of status has largely passed away, giving place to the condition of contract, in which sums certain are insured for in place of indefinite promises made by associations operating, contrary to their inten- tions, on an unscientific, and unbusinesslike basis. Modern conditions in a free democracy make it imperative that each man shall take care of his own, or, as Professor Sumner has put it, " Every man and woman in society has one big duty. That is, to take care of his or her own self. This is a social duty. For, fortunately, the matter stands so that the duty of making the best of one's self individually is not a separate thing from the duty of filling one's place in society, but the two are one, and the latter is accomplished when the former is done. ' ' * For fifty years previous to the establishment of The Prudential in the city of Newark, N. J., workingmen, in their own way and at their own cost, made efforts to provide, by means of the principle of association, for the contingencies of illness and of death. It is a long and interesting history, which has never been written and which has only rarely been touched upon by historians. That the principle of " providing by the association of the many for the contingencies likely to affect the few ' ' is weak and inherently false when applied to life contingencies, unless the laws of human mortality, of sickness and finance * What Social Classes Owe to Each Other, p. 113. EARLY WORKINGMEN'S INSURANCE IN AMERICA. 7 are properly recognized and rigorously applied, is self-evident to all familiar with the science of life insurance. The early forms of association secret orders, as they have been called recognized fully the general principle of association ; and while they accomplished much good by its application, they failed completely the moment they added to their benefit features a life- insurance provision for a sum certain, without taking account of the laws of human mortality and finance. With all the good which these associations have accomplished, they have fallen lamentably short in this respect, and countless millions of hard-earned money have been sunk in ' ' Fraternal Orders ' ' or other forms of work- ingmen's insurance associations, for which neither a fraternal or financial return has ever been made. Providing for the wants of the few at the expense of the many is a complete perversion of the principle of association, a principle fully deserving to be more completely understood and recognized by economists and writers on social problems, since it lies at the root of all modern efforts to improve the methods of production and distribution for the benefit of the masses. I,ife insurance as carried on by corporations or companies is solely a question of contract, while all forms of organizations such as Fraternal Orders are either wholly or largely operated on the ancient basis of status. The former method concerns itself principally with the question of security for the performance of its accepted obligations, while the latter has for its object a multi- tude of aims, with but small regard for the contract or business nature of its implied obligations.* Such organizations existed in this country long before even Ordinary life insurance assumed * This point is well brought out by Mr. Sydney Webb, perhaps the highest authority on Trades Unions, in his recently published work, " Industrial Democracy," pp. 154 and 155, where it is said that "A member who has paid a whole life-time to the sick and superannuation funds may at any moment be expelled and forfeit all claims for reasons quite uncon- nected with his desire for insurance in old age. Against the decision of his fellow-members there is in no case any appeal ; moreover, the scale of contributions and benefits may at any time be altered even to the extent of abolishing the benefits altogether ; and such alterations do, in fact, even take place in spite of all the protests of the minorities of old members. * * * It is a further aggravation that in any crisis the Trades Union, unlike the Friendly Society, regards the punctual discharge of sick and superannuation liabilities as a distinctly secondary consideration. 8 HISTORY OF THE PRUDENTIAL. definite proportions, and the Odd Fellows, for instance, had a large membership before the first active American life company was organized, in 1843. Occasionally some of the principles of the system of Industrial insurance were partly recognized and partly incorporated in the various efforts to improve the condi- tion of the masses ; but, standing alone, all of such efforts came to an early end and proved useless undertakings. Thus, for example, the element of weekly saving by the weekly payment of small sums for a future contingency was recognized as early as about 1820 by the Philadelphia Fuel Saving Society, which required members to deposit weekly small sums of money to provide for the winter supply of fuel. The principle of family insurance was partly carried out in the practice of the Pennsyl- vania Company for the Insurance of Lives, organized in 1812, which accepted risks at ages as low as eight years, indicating that even at this early period life insurance at the younger ages was thought desirable, if for no other purpose than as an encour- agement of the habits of saving and thrift in early life. It was not, however, until 1847 that the nrst effort was made to provide genuine life insurance for the masses, and, while the | experiment proved a failure, it is of considerable interest from an \historical standpoint, as a strong indication of the early need of the masses for life insurance on the weekly-payment plan. The credit for having tried this experiment belongs to the Mutual Benefit Life Insurance Company, of Newark, N. J., which com- pany, in 1847, offered to the less prosperous classes a policy on which premiums of twenty-five or fifty cents could be paid weekly, but, no provision having been made for the collection of the premiums, the plan proved a failure and few if any policies seem ever to have been issued.] The views of this company on the subject of " Life Insurance for All " are clearly set forth in a little publication called "The American Manual of Life Insur- ance, ' ' in which it is stated that life insurance ' ' is a mode of accumulation open to all classes of men in all pursuits of life," that "the merchant, the minister, the mechanic, the farmer and the laborer may all avail themselves of it to some extent with ease, and to the greatest advantage," and "it is therefore truly an investment for the millions." To meet the demand for mass insurance at this early period, a form of association was brought into existence which in part resembled the English Friendly Societies, and in a larger part WORKINGMEN'S INSURANCE IN AMERICA. 9 the trading and business organizations of the present day. "Health Insurance," as it was called, attempted to provide for support in sickness and for a burial fund at death, but, without exception, all the societies of this name organized between 1845 and 1855 came to an early end, in consequence of inherent weakness and the absolute impossibility of transacting a sick-benefit business through the medium of a non-fraternal organization. Although the early health-insurance companies all came to an end by about 1855, a revival of these organizations occurred during the sixties, when in a somewhat similar form another effort was made to gain permanent public support, which, however, was again followed by failure. Very little seems to have been known in this country as to the practice of English Friendly Societies and practically nothing of the system of Industrial insurance as practiced at this time by the ' ' Indus- trial and General" and the "British Industry," which com- menced the Industrial business in 1852 and had by this time issued a considerable number of policies. The first American reference to the system of Industrial insurance, as practiced in England, occurs in Hunt* s Merchant' s Magazine* for 1851, in which the editor, Freeman Hunt, called attention to the recent English experiment by the ' * Industrial and General ' ' in the following quotation from the Liverpool Chronicle : ' ' We have had our attention directed to a brochure bearing the title ' What is Life Insurance ? ' written by the Rev. J. B. Beade. It is in the form of a dialogue between two laboring men, and is mainly calculated to show the illiterate and unthink- ing the great advantages offered by well-regulated and stable as- surance associations. ' The Industrial and General Life Insur- ance and Deposit Company ' has been instituted, and arranged on a plan expressly to meet the requirements of persons of limited incomes accruing at short periods. With a view of adapting it to the wants and wishes of the industrial classes, the directors have arranged to grant assurances and annuities as low as ^5, at premiums payable weekly, monthly, quarterly, or annually." This, as far as I know, is the first distinct mention of the modern practice of Industrial insurance in any American publication, but the article seems to have attracted little attention and had no * Vol. XXIV., p. 521. 10 HISTORY OF THE PRUDENTIAL. influence in establishing Industrial insurance in the United States. At this time Savings Banks, Health Insurance Companies and Secret Fraternal Societies were apparently more promising and more satisfactory methods of insurance and saving, though, as a matter of fact, all forms of life insurance were looked upon with but a small degree of favor by otherwise well-informed public journals and men of influence and power. Thus, in the year 1853, the New York Times, in a lengthy argument, maintained the view that " He who insures his life or health must be indeed a victim of his own folly or others' knav- ery, " and a Mr. A. B. Johnson, a Baltimore banker and writer on economic subjects, expressed himself forcibly against the theory of life insurance and in favor of the theory and practice of savings banks, holding that all life insurance was wrong in prin- ciple and false in practice, and that savings banks alone furnished a proper means for the investment of the surplus funds of the people. It may not be out of place to give some space to Mr. Johnson's views, since they were re-published in his book on "Our American Union" in 1857.* The writer argued that "if no life insurance would provide for our families after our decease, no health insurance or club would provide for ourselves during disease, and bury us decently when dead, we should [would] provide for these purposes by self-denying accumulations." Mr. Johnson did not stop here, but quoted some English data and made the distinct charge that " L,ife insurance is unfavorable to domestic purity," and "in Kngland, mothers have been con- victed of murdering their infants to obtain some petty sums which certain clubs bestow for funeral expenses on members whose children die." This is, as far as I know, the first instance of the charge of child-murder for insurance money made in this country against the system of life insurance for persons of young ages. Mr. Johnson was wrong in his confusion of ideas as to Knglish burial clubs, which never represented a distinct form of insurance associations organized on actuarial principles. He admitted that the insurance was only for decent burial purposes, and he brought no proof to support his monstrous allegation of child-murder for insurance money, an assertion made solely for the purpose of emphasizing his views and opinions in favor of * A Guide to the Right Understanding of our American Union, N. Y., 1857, p. 263 et seq. EARLY WORKINGMEN'S INSURANCE IN AMERICA. n savings banks for the masses. Mr. Johnson's article attracted considerable attention, and was answered by the then President of the Mutual L,ife Insurance Company, Mr. J. B. Collins, who ably refuted the absurd propositions of the writer. Mr. Collins' s forci- ble argument induced the editor of Hunt' } s Magazine to publicly disavow any responsibility for Mr. Johnson's views, and to express himself as being strongly in favor of life insurance " as a method of delivering human life from the tyranny of chance," and as a means or arrangement "by which all the insured become pos- sessed at once, for the benefit of their survivors, of accumulated property, and in which no one, in any contingency, can be con- sidered a loser. ' ' * What was needed at this period was a more extensive dis- cussion of life-insurance principles, with which the most intelli- gent were practically unfamiliar. Agents were rarely employed on an extensive scale by even the larger companies, and the real facts pertaining to the business seldom came to public knowledge. One of the first public journals to give intelligent considera- tion to life insurance was Rhodes' s United States Advertiser, f which in 1854 contained a lengthy dissertation on this subject, its general history, object and principles, the article concluding with the statement that ' ' There is a wide and increasing field for the operations of life assurance in the United States, and even in the city of New York. The subject requires to be familiarized to the intelligent middle classes of the people. Much can yet be done in this country to popularize life assurance and bring it within the reach of even the humblest classes." This is, as far as I know, the first distinct plea for the extension of life-insurance principles to the industrial population of the United States. It was made at a time when all life insurance in this country was in its infancy, when the largest company in existence had only a little over 8,000 policies in force, and when the total number of policies in the United States was estimated at only 30,000. Lack of familiarity with the English experiment in the direction of extending life insurance to the masses, and a well- founded aversion to the existing forms of so-called Health or * Vol. XXVII., p. 541. t Insurance Monitor, 1854, p. 38. 12 HISTORY OF THE PRUDENTIAL. Co-operative insurance, induced the editor of Tucketf s> Insur- ance Journal* to advocate at this time the extension of life insurance to the masses in a manner and by a method which only during recent years has been applied with any degree of scien- tific accuracy. Mr. Tuckett's suggestion, that "Canvassing from home to home will furnish the largest amount of business and afford the highest amount of remuneration," made clear his conception of the value of life insurance for all, and the need of direct personal explanation to the people of the methods and objects of the business. Gradually, the view that life insurance could be made available to all of the ele- ments of the population, the rich, the middle class and even the poor, had gained ground. By 1858 some of the leading news- papers had taken up the question, and, among others, the Boston Herald expressed the opinion that "There is another branch of insurance which demands more attention than it has thus far received we mean life insurance that is, the class of individu- als whose families depend upon their daily exertion should insure their lives more frequently than they do " ; and hence the conclusion that ' ' Those who could not afford to pay for large policies could, with a little extra economy, pay the premiums upon a policy for $1,000, or upon a policy for a few hundred, which would have been of invaluable aid to their families in case the bread-winner himself is taken away."f The suggestion of the Herald was fully supported by the fact that at that time the " humbler classes " did not avail themselves to any appreciable extent of life insurance on the Ordinary plan, for out of 830 new applicants in the New England Mutual L,ife, a Massachusetts insurance company, only thirty-one were mechanics, while the remainder were all men in well-paying positions, or men of considerable income and means. Some companies since 1840, at least, had granted insurance for sums as low as $100, but the demand for this form of insurance had been very small. J It was not merely a question of amounts, but much more a question of * Tuckett's Insurance Journal, 1853, p. 43. t Hunt's Merchant's Magazine, Vol. XXXVIII., p. 626. J "According to an advertisement of the New York I,ife Insurance and Trust Company, published in Williams's New York Annual Register for 1840, life insurance was offered at ages fourteen years and upwards for sums as low as $100." EARLY WORKINGMEN'S INSURANCE IN AMERICA. 13 the mode of paying the premiums, and for these improvements and the consequent introduction in this country of the Industrial plan of insurance on the weekly-premium basis, the time had not arrived in 1859. That there was an open field and large oppor- tunity for the extension of the efforts to insure the masses was not only recognized by influential insurance and financial jour- nals, but also by at least one of the officers of one of the large insurance companies of the day. In a speech made at a conven- tion of life-insurance companies in 1859, Dr. R. M. Reese, Medical Examiner of the Knickerbocker Life Insurance Company, referred to the subject as follows : "I allude to the importance of greatly extending the benefits of Life Insurance among the masses, by creating public opinion, and educating the whole people into enlightened views of the duty of every man, living in a land where casualty and disease expose him to the hazard of early and even sudden death." * By 1860 Ordinary life insurance had assumed considerable proportions, and insurance journalism had developed into a distinct branch of literature. According to the census of that year, there were, in the United States, forty-seven companies for the insurance of lives, having an aggregate amount of insurance in force of about $180,000,000, on 60,000 lives. Among the foremost insurance journals of the period we must name the Insurance Moni- tor, a journal devoting a large amount of its space to the technical discussion of the perplexing problems confronting the life-insur- ance companies of this period. The Monitor, following TuckcW s Journal, had frequently argued in behalf of a more extensive development of insurance principles, but, as has been pointed out, very little had thus far been done to meet these wants, while the effort of the ' ' Health ' ' insurance companies had been a delusion and a fraud. In the latter part of 1860 the Moni- tor, in an article on ' ' Life Insurance for the Poor, ' ' f referred to the subject of insurance for the masses, as follows: " Every workingman should know that for one shilling a week a penny more or less, according to his age he can leave $500 at death, and have his fair share of the profits of the company." This is, as far as I know, the first distinct attempt to interest the " poor " of this country in life-insurance questions ; and while the term * Insurance Monitor, June, 1859. f Insurance Monitor, 1860, p. 207. 14 HISTORY OF THE PRUDENTIAL. "poor" is one of indefinite meaning and wide application, we may safely assume that the writer referred to the masses of people earning weekly wages, for it will be noticed that he argues in favor of insurance based on a weekly premium of one shilling, or about twenty -five cents. This plea for workingmen's insur- ance on the weekly-payment plan proved, however, also a useless one, and no one seems to have considered it worth while, at this period, to undertake the transaction of this form of insurance. By 1860 the difficulty of extending level-premium insurance to the masses had been fairly well recognized. On the one hand, it was apparent that direct solicitation, through the medium of agents, by a house-to-house canvass, was absolutely necessary to familiarize the masses with the principles and objects of insur- ance. On the other hand, it was equally clear that the system required modification, both in the mode of paying the premiums and in the opportunity offered for insurance for small amounts. Among others, Mr. Klizur Wright, somewhat in harmony with Mr. Tuckett, expressed himself on this question as follows : 1 ' Forethought and mutuality of effort to provide the most effect- ually against future contingencies are not a spontaneous growth of the human soil. It is a matter of special cultivation ; the result only of some sort of missionary labor, notwithstanding its manifest coincidence with the highest interests of all concerned." * Mr. Wright clearly recognized the importance and necessity of the canvassing insurance agent, and in concluding his argu- ment expressed himself as follows on this point : ' ' Among the honorable workers in the civilized world to whom the public as well as the insured will die indebted, we give faithful and suc- cessful life insurance agents a high place. It is hardly possible to believe that a life insurance agent can achieve any long-con- tinued success without bringing into action some of the noblest qualities of a sterling man, and no field that we know of is more inviting to an ambition that would devote the best of talents to the benefit of society at large and individuals in particular." f What was true of Ordinary insurance was still more true of Industrial insurance on the weekly-payment plan. Among the industrial population practically nothing was known of the prin- ciples on which the science of insurance is founded, and of the * Mass. Ins. Report for 1863. t Ibid, EARLY WORKINGMEN'S INSURANCE IN AMERICA. 15 results of life insurance as they were fairly known and recog- nized among the more prosperous elements of the population. It is not too much to say that there was very little faith in insur- ance principles, and that the entire scheme of so-called " Frater- nal" insurance, of " Health" insurance, or of insurance on the co-operative plan, was looked upon rather as a form of specula- tion or even as a game of chance, than as a legitimate method of investing surplus earnings for the purpose of providing for future contingencies. An immense amount of missionary work was necessary to acquaint the masses with the facts which would tend to make possible a universal recognition of the adequacy of insurance principles as applied to Industrial insurance on the weekly-payment plan. In looking back over the quarter-century which has passed since Industrial insurance was successfully introduced in this country, by the establishment of The Prudential in 1875, the fact which stands out broadly as perhaps its greatest triumph is the absolute confidence of millions of working people in the financial solvency of the institutions which carry on this business at the present time. So absolute is this confidence, so firm is this faith, that it is not too much to say that in this country, as in Kngland, the average workingman looks upon an Industrial policy as the more prosperous look upon the possession of a government bond. This much-to-be-desired result has been brought about by the careful management of representative Industrial companies, not one of which has ever failed to meet its obligations, and by the work of tens of thousands of agents, who daily carry into the homes of the people the gospel of insurance in one direction and the gospel of thrift in every other direction. In view of the clear recognition on the part of Mr. Wright, of certain practical aspects of the insurance problem, it is rather curious that he should have failed to recognize the intrinsic value of the principles of Industrial insurance, or family insurance on the weekly-payment plan. Rather to the contrary, such refer- ences as were made by Mr. Wright, in his public reports as Insurance Commissioner of Massachusetts, to the practice of In- dustrial insurance in England, were adverse to its extension to the United States on the ground of its being inimical to public policy. Mr. Wright, as early as 1865,* expressed himself in * Tenth Mass. Ins. Report, 1865. l6 HISTORY OF THE PRUDENTIAL. opposition, not only to the insurance of children, but also to the insurance of persons above sixty, and, while opposed to the Industrial companies and by implication, at least, to the Friendly Societies, he fully approved of Gladstone's plan of post-office insurance, which was introduced at this period as a government measure, which, it was claimed, would produce the same results in life insurance as had been achieved in another direction through the medium of Post-Office Savings Banks, although subsequent experience, extending now over thirty-five years, has clearly proven that State trading in the direction of life insurance for the masses on a voluntary basis has been a distinct failure, in spite of the energetic efforts which have been employed to make it a success. In his advocacy of Government Insurance Mr. Wright had the support of the New York Times, which endorsed the theory that the condition of the industrial masses was likely to be materially improved through the medium of Government Insur- ance for small amounts ; but the Insurance Monitor properly directed attention to the fact that what was attempted by means of Government Insurance had already been accomplished by the British Prudential through its system of Industrial insur- ance, and that the company at that time that is, in 1864 had already 174,000 policies in force on the weekly-payment plan. When it is considered that the largest Ordinary life company in the United States had in 1864 only a little over 12,000 policies in force, it will be readily understood that this statement of the actual progress and results of the British Prudential must have had a considerable effect on the public mind, and on reflec- tion it must have been apparent that what was true for England was equally true for this country, namely, in the words of the Insurance Monitor (1864), that " the tendency of life insurance now is towards small amounts. ' ' But at this period co-operative insur- ance, health insurance, trade benefit societies, etc., were looked upon as more likely to accomplish for this country what the Prudential had already accomplished for England. In New York State alone, 303 mutual aid societies, for benefit in sickness and assistance at burial, had been organized during the period 1848-' 66, while countless other insurance and aid associations had been organized in different parts of the country, but of all those established previous to 1865 practically none remains in existence at the present time. In making reference to one of these EARLY WORKINGMEN'S INSURANCE IN AMERICA. 17 extinct associations, the New York Policemen's Insurance Fund, the Monitor (1865, p. 191) touched upon the subject of insurance for the masses in the following words : " Life insurance in all of its forms is so great a blessing that we can never tire of recommend- ing its features and progress, and urging it upon every class of our fellow-citizens. When everybody is insured, then, but not until then, shall we know that the voice of warning and of counsel in this respect may properly be hushed." While emphatically in favor of insurance for the masses the Monitor and other insurance journals missed no opportunity to condemn the large number of impracticable schemes constantly placed before the public under the name of health insurance or co-operative insurance, all of which were inherently weak and unable to survive more than a generation at the best. Refer- ring to the revival of health insurance at this period, the Monitor denounced its impracticability in words which were not likely to be misunderstood. "As health insurance in this country and in England (meaning the Friendly Societies) has proved a delusion and a snare and has terminated disastrously to the insured, con- sisting solely of the poorer classes, we should deplore a repetition of an experiment that has so little chance of success." Referring to the same subject, the Spectator in 1868 condemned the plea for health insurance as one which was " successfully and ingeniously framed, and therefore all the more dangerous." With equal emphasis, the Insurance Times spoke of health insurance as "founded on a fraudulent fallacy, which could only survive by deceiving and robbing the poor." In defense of these associations it was argued by the manager of one of them that "The object is to extend the benefits of insurance to a class of people heretofore entirely neglected, and by judicious and scientific management this branch of insurance can not only be made the most secure and profitable, but it will also prove a benefactor to the working classes." Since all of these associations were practically founded on guesswork, with no attempt to provide a financial basis for maturing obligations, it was only a question of time when failure had to take place ; and of all the associations that were established at this period, of whatever name, claiming to provide insurance for the industrial masses, not a single one survives at the present time, and all these futile efforts to effect so-called cheap insurance represent an immense loss to those who could 18 HISTORY OF THE PRUDENTIAL. least afford to waste their money in worthless enterprises of this kind. It is impossible for me, for want of space, to discuss here the question of co-operative insurance and the rise and fall of these societies, as well as the cause of their inevitable insolvency and decay. They represent a dreary repetition of the well-known story of the workingmen's insurance associations of Bngland, without the redeeming feature of workingmen's insurance on the Friendly Society plan. No more instructive lesson is furnished by life-insurance history than that which deals with the gloomy record of co-operative or other forms of associations attempting to furnish so-called life-insurance protection in defiance of life- insurance principles. Unfortunately, the very term ' ' co-opera- tive" has been almost universally misunderstood, and a special meaning has been attached to the word which has remained in common use up to the present time, and is likely to remain so for many years to come. As Mr. Spencer has well pointed out, "Social life in its entirety is carried on by co-operation, and the use of the word to distinguish a special form of social life is a nar- row use of it." * But this view of Mr. Spencer has not yet found acceptance in common thought ; rather to the contrary, it is the opinion of the masses, who believe in this special form of co-opera- tion, and who agree with Professor Ely, that " Co-operation con- templates a complete though peaceful transformation of society," and that the method by which this is to be accomplished is to se- cure economy by the abolition of the middle-men. t Unfortunate consequences must naturally result from such confusion of princi- ples and facts. Originating at a time when life insurance on the part of the masses was being demanded to an ever-increasing degree, these associations, often parading under high-sounding titles, and often supported by the names of men of prominence in the com- munity, imposed upon the credulous masses a sham. An excel- lent illustration of one of these concerns is furnished by the Manhattan Co-operative Relief Association, organized in New York in 1868. From the outset this association was condemned by the Spectator and other insurance journals, as a "monstrous fraud," and as nothing more or less than "insurance for an * Principles of Sociology, Vol. III., p. 553. t The Labor Movement in America, p. 169. EARLY WORKINGMEN'S INSURANCE IN AMERICA. 19 uncertain amount at uncertain cost. ' ' It represented only prom- ises, and in nowise offered a guaranty of results, though, in the words of the Spectator, ' ' Those who are familiar with even the elementary principles which govern life contingencies do not need to be told that the scheme is as utterly impossible in practice as it is wild in theory."* Unfortunately, the masses and even the educated and well-to-do of this period had but hazy conceptions of the principles of life insurance, and it is a fact worthy of notice that a scheme so plainly speculative had the support of emi- nently respectable journals like the Church Union and The Independent, and of secular publications like the Atlantic Monthly and the New York Tribune, in which the concern was exten- sively advertised. As regards the Church Union, it was stated at the time, with much truth, that "it was the laudation" of the editor of this journal "that first gave repute and standing to the delusion and enabled its concocters to inveigle agents into its service, and to employ them to deceive the people." f After a brief period the Manhattan Co-operative Relief Asso- ciation went out of existence, and the money that had been put into the Association by ignorant policy-holders was, of course, a total loss ; but in spite of actual experience, in spite of emphatic condemnation on the part of qualified critics, of the insurance press and the Insurance Commissioners of the various States, in the absence of a more legitimate and permanent form of insurance, such as could have been furnished on the Industrial plan, similar associations flourished for a short period in all parts of the coun- try. Moreover, they are in existence to-day, numbering their members by the million, although the handwriting on the wall has for years pointed to an enormous loss, and the annual crop of failures has brought misery and loss to hundreds of thousands, who in these associations had invested their all. A complete perversion of the principle of association is not likely to prove a means for the permanent amelioration of the condition of the industrial population. ERA/TrS. OF THX X * Spectator, 1868, p. 271. t Insurance Times, 1868, p. 472. 20 HISTORY OF THE PRUDENTIAL. CHAPTER III. INDUSTRIAL INSURANCE BEFORE 1874. By 1868 Ordinary life insurance had reached almost stupen- dous proportions, but, as has been previously pointed out, thus far there had been no distinct effort to make level-premium insurance available to the industrial population by improvements and changes in the method of premium payments. Thousands of ventures under the name of health insurance, co-operative insurance or life insurance by the secret orders had proven inade- quate to the demand. Association after association, company after company had been organized, flourished for a short time and failed. Even under the distinct name of workingmen's or laboringmen's insurance a number of companies or societies made efforts to gain a firm footing, but without success. JThus, in 1868 there was organized the People's Life Insurance Company for industrial classes, in the city of New York, and in 1869 the Miners' and Mechanics' Life Association of Missouri, the Labor- ingmen's Life Insurance Company of Chicago, the Workingmen's Life Insurance Company of New Orleans, the New York Work- ingmen's Benefit Company, and also the Workingmen's Union in the city of New York, but none of these companies, on account of inherent defects, was able to attain to even a fair degree of prosperity and financial stability, and all, without exception, came to an early end. That these associations were created or developed in answer to a distinct demand on the part of the working-people for some form of life insurance is self-evident from a study of the prospectuses, which, as a rule, state, as the object in devising the scheme, that "it is to render the blessings of life insurance more than ever accessible to the industrial classes." Unfortunately, the promoters erred in assuming that what was wanted on the part of the masses was ' ' cheap ' ' insur- ance, rather than insurance on a plan of premium payment more convenient and more in harmony with their ability to pay. In INDUSTRIAL INSURANCE BEFORE 1874. 21 some instances the premiums were to be paid monthly, but in all cases the fundamental principles of life insurance were violated and the ignorance of the promoters of these organizations of the practice and principles of the business was evident from the fact that, as a rule, all classes of members were accepted without distinction as to age, the cause of insolvency and failure in the English Friendly Societies. In 1867 the Insurance Monitor recognized the increasing necessity of insurance for the masses, stating that "Working people, and all whose families are supported by daily, weekly or monthly wages, stand more in need of life insurance than any other class. ' ' For this reason the Monitor advised improvements in the mode of paying the premiums, "which would render the task much easier of fulfillment than formerly to persons of moder- ate means." In 1868 the Monitor further discussed the question as to ' ' Who and how many may insure their lives' ' as follows : ' ' Whether life insurance will finally be so far cheapened and popularized that the working masses, mechanics and laborers, those depending on weekly wages, can be persuaded to a general adoption of the practice, must depend largely on moral and intel- lectual training. Life insurance presupposes a community of refined tastes, social affections and correct moral conviction. In proportion as our people advance to the higher planes, the custom will widen and deepen among the foundation classes." After some further remarks, the Monitor concluded that ' ' The common people, as well as sagacious business folk, begin to understand its value." Up to this time, however, the weekly -premium plan of the British Prudential had remained practically unknown to the insurance journalists of the period, and, although the British Prudential by 1868 had approximately 170,000 policies in force, no one writing on insurance subjects seems to have been familiar with its practice and results. One company, the American Popular L,ife, organized in 1866 as a level-premium company, following the effort of the Mutual Benefit of Newark in 1847, had offered to accept premiums weekly, monthly, quarterly or annually, but, as far as I have been able to learn from correspondence with some of its officers, very little business was ever transacted on the weekly plan. vThe first distinct effort to establish Industrial insurance in the United States would seem to have been made by a Mr. Peacock, 22 HISTORY OF THE PRUDENTIAL. of Zanesville, Ohio, who, according to the Insurance Times for 1868 (p. 232), had "made a special study of life insurance in its adaptation to the industrial classes," and " devised a system by which he hopes to bring the benefit of the institution within the reach of the poorest laborer, and render it more available to him in life and to his heirs at his death, than by any other hitherto adopted." This attempt on the part of Mr. Peacock seems to have been the first effort to establish Industrial insurance in the United States, but there is no evidence to show that the plan, so briefly outlined, was ever actually carried into effect, and insurance history is silent as regards one who thus early recognized the need of the masses for legitimate life insurance on the Industrial plan. No doubt the item attracted attention, and possibly had some influence in bringing about another similar effort during the latter part of the year 1868. The Insurance Times for October, 1868, makes mention of The Industrial Life Insurance Company, which ' ' title has been adopted by a new organization, whose formation exhibits the expansive vitality of good seed planted in a rich soil. It is to be a purely stock company, promising no profits to the insured, and will have a capital of $i 25,000." Among its incorporators was Mr. William H. Beers, at that time Vice-President of the New York Life. The Insurance Times stated that the company would "be a thorough and legitimate life insurance company, but more especially adapted to the requirements of the poorer classes. It will seek to extend to them the blessings of life insurance, by accepting weekly instead of quarterly, semi-annual and yearly payments of premiums, and by conforming all its plans, methods and practices to the necessities, wants and abilities of the indi- gent and laboring portion of the community. ' ' This effort, also, seems not to have been carried beyond the preliminary steps, and I find no record of the Industrial Life ever having had a corporate existence. Mr. Beers, as Vice- President of the New York Life, had no doubt become familiar with the English system of Industrial insurance, but, for reasons which can not now even be guessed at, the project fell through, and the Industrial Life of 1868 never had more than a paper ex- istence. The effort, however, was a step in the right direction, and at the time seems to have attracted considerable attention. Thus, in the Exchange and Review for November, 1868, there appeared an article on ' ' Industrial Insurance ' ' from which I also INDUSTRIAL INSURANCE BEFORE 1874. 23 make a brief extract : "The adaptation of life insurance to the circumstances of the working classes is an idea whose practical and true development in the United States is yet in embryo. In England it has received more attention, but it is there beset with the drawbacks which seem inevitable to all projects having for their proposed object the bettering of the financial condition of the great masses. * * * * Without doubt, the penny of the poor man is to have its place in life insurance accumulation as well as the dollar of the capitalist, but it behooves all concerned to watch that sharpers do not divert the tendency of the hour in this re- spect to their own benefit." In explanation of its attitude of caution, the Exchange and Review added the statement that "A lyondon journal, in an exposition of the frauds which have, under the name of industrial assurance societies, so exten- sively swindled the poorer classes of England, remarks : ' In- dustrial, like the higher kinds of life insurance, can not be man- aged properly except upon purely scientific principles. * * * * This is the manner in which the Prudential and one or two other offices have proceeded, and which now stand out promi- nently as the leading industrial assurance companies, presenting a marked contrast to the miserable creations of the illiterate adventurers.' ' We have here a clear and concise recognition not only of the public demand for Industrial insurance on the plan of the Pru- dential of England, but a word of caution against the fraudulent and ruinous methods employed by co-operative and other forms of pseudo-insurance associations having for their principal object the rapid enrichment of their promoters. It was just such advice as this, based on a sound knowledge of insurance princi- ples, that was needed at this period to keep the ill-informed, though perhaps of honest intent, from entering upon an enter- prise in which failure on a large scale would have done incalcu- lable harm to the cause of legitimate life insurance for the indus- trial population of the United States. That the subject was now attracting considerable attention among the intelligent and well informed is apparent in the increasing number of articles upon the subject in the insur- ance journals of the period. In the Insurance Times for 1869, Mr. J. F. Entz, one time Actuary of the New York Life Insur- ance and Trust Company, in a long and able article discussed the subject as follows: "With all the noble and widespread 24 HISTORY OF THE PRUDENTIAL. benefits which life insurance confers upon society, it must be acknowledged that it falls lamentably short in one quarter, and that in a quarter where its ministrations are most needed ; we mean among the poorer classes. Notwithstanding the immense progress of life insurance in this country during the last twenty years, we are ignorant of many features practised with great success in England, France and Germany. These improvements are mostly toward the end of opening the doors to the masses of the middle and laboring classes, and every well-wisher of his fel- low-citizens who has influence among our insurance companies should interest himself in their speedy introduction in the United States." Mr. Entz fully recognized, as one of the most important steps in this direction, that " every facility should be^ extended in the mode of paying premiums" but he also recognized another factor of most importance in the extension of insurance princi- ples to the masses, and that was the need of insurance for every member of the family. In other words, family insurance on the Industrial plan, as practiced by the British Prudential since 1854. In reference to this part of his subject Mr. Entz stated that "Burial societies have existed for many years in this country, but they have hitherto been defective in two points, " namely, ' ' all members were assessed alike without regard to age ; sec- ondly, they have not extended the benefit of the subscriber's risk to every member of the family." By 1870 two of the essential principles of Industrial insur- ance had been recognized by influential writers on insurance, namely, the weekly-payment principle and the principle of family insurance ; and it only remained for those who contemplated the practical inauguration of Industrial insurance in the United States to recognize with equal clearness the necessity of the collector and the adjustment of the amounts of insurance to the premium as a unit of five cents, or multiples thereof. Mr. Entz in 1 870 had made an attempt to carry his ideas into practical execution, and organized that year The Progress L,ife and Savings Insurance Company of the United States, but, for reasons which can not here be discussed, the project was never carried into actual operation, and in some respects this was fortunate, since, as has previously been pointed out, failure of any honest attempt to promote savings or insurance on a large scale would have been disastrous to the cause of legitimate life insurance for the INDUSTRIAL INSURANCE BEFORE 1874. 25 industrial population. The rather curious and interesting com- bination of the principle of savings with the principle of insur- ance has previously been referred to, but it can not be too often pointed out that savings banks and life-insurance companies each have their distinct position in the domain of thrift and social progress, and they can never be combined to successfully accom- plish the same purpose. Savings banks by 1870 had, it is true, reached a very important position, but it was far from being true that savings habits among the masses had been extensively devel- oped. Careful investigations made into the subject by qualified investigators, especially in Massachusetts by the Commissioner of Labor,* had demonstrated, first, that only a little more than one-half of the depositors at that time really belonged to the wage-earning classes ; second, that the average number of de- posits made per annum by a depositor was small, and in Massa- chusetts savings banks was only two and a half deposits for each depositor. The latter fact is of much importance in that it shows that systematic weekly savings had not yet gained a firm footing among the industrial wage-earners of Massachusetts, and the Labor Commissioner supports this conclusion by the emphatic statement that ' ' Our investigations into the earnings and cost of living of wage-laborers, the results of which were given in two previous reports, convinced us that savings are the exception and not the rule. To reconcile this fact with the general statement that the hundreds of millions of dollars now on deposit in our Savings Institutions are the savings of the wage-laborer, is im- possible." This assertion was not new to those familiar with the official reports of the Savings Banks Commission, who as far back as 1852 had stated that "persons who are regarded as wealthy make deposits in Savings Banks to the extent of the legal limits," and in 1870 Governor Claflin repeated this statement in the words that ' ' These institutions are becoming still more the favorite places of deposit, not only for persons of small means, but also for those seeking investment for very considerable sums. The prudent management of those banks has met its reward in gaining the confidence of the public to such a degree that even the capitalists use them as places of investment. ' ' To these em- phatic and unqualified statements I may add the following extract from the Governor's message for 1871 : "It is very evident that * Third Mass. Labor Report, p. 293 et seq. 26 HISTORY OF THE PRUDENTIAL. a large share of this increase is not the saving of labor. Each year shows more deposits by capitalists." From such evidence it is quite plain that by 1870 a very considerable proportion in number and a much more considerable proportion in amount of the savings-banks deposits were those of the well-to-do, rather than those of the industrial or wage-earning masses. The"-facts for Massachusetts would seem fully to warrant the following conclusions : first, that by 1870 the considerable in- crease in the amount of deposits was largely due to the rapid accumulations of the wealthy, who made extensive use of the banks at this period ; second, the proportion of the depositors who were actually wage-earners was only 58 per cent. ; third, the average number of deposits per annum and per depositor was only two and a half, which would absolutely prove that the habit of systematic weekly or even monthly saving had not yet been developed among the industrial masses of Massachusetts, and probably not in other parts of the country. Finally, it was shown, by investigations made at this period, that the foreign- born population, most in need of a small fund for unforeseen contingencies, had not yet learned to make extensive use of the banks. It remained for Industrial insurance, by its system of weekly-premium payments, to largely develop the habit of sys- tematic savings which has done much, if not most, to materially increase the general welfare of the industrial population. What was true of savings habits in the use made of savings banks was equally true of savings habits in the use made of Ordi- nary life companies by the wage-earning population. Attacks on the whole system of life insurance " as one of robbery and fraud " were made editorially in the New York Tribune in 1869, while other newspapers with equal emphasis condemned the entire system of life insurance, much to the detriment of the prog- ress of the insurance idea among the masses. Still the ques- tion of providing life insurance for the industrial population continued to receive occasional attention, though only in a half- hearted manner. Evidently, many of those who most seriously considered the problem, being confronted by the rising tide of co-operative insurance, combined with the hostilities of leading newspapers and of men of influence to the entire system of level- premium insurance, considered the task of establishing safe insurance on the principle of absolute security, in the face of INDUSTRIAL INSURANCE BEFORE 1874. 27 the demand for cheap insurance, or pseudo-insurance, a hope- less one. " Life insurance," in the words of Mr. D. N. Holway, " is a purely scientific financial procedure. It guesses at nothing." On the other hand, co-operative insurance, so-called, was a pro- cedure in defiance of all principles of sound finance, and a guess at everything, including the rate of human mortality, on which the charges or dues were supposed to be based. Hence, with the latter it was only a question of time when the inevitable crash would have to take place. Owing to a large variety of causes favoring the growth of co-operative insurance, the end was put off much longer than would have been the case under normal conditions. Still, in the words of the Exchange and Review, the co-operative movement, and similar attempts at life insurance by organizations or trade societies, were not "without signs of good, despite the abnormal forms which they are assuming. They reveal a growing interest in life insurance among masses who have not yet embraced its provisions." And as one of the possible solutions of the problem the Exchange and Review (1869) suggested that "Unions for effecting life insurance with the companies, and under special arrangements, may be a part of the programme of the future unions which may make indi- vidual insurance certain and more available. * * # * Cultivating the habit and practice of life insurance, they may make it less apart from the practical consideration of the people." In explanation of these unions for effecting life insurance with the companies, which, in a measure, were rather peculiar attempts for an alliance of trade associations and others with the regular life-insurance companies for the purpose of providing life insurance for the members, the Exchange and Review refers to one such experiment as follows : ' * The New York Life Insurance Company has made a proposition of this kind to the Working- men's Union [previously referred to] . * * * * The prop- osition was to insure not less than 1,000 workingmen of the various trade unions, issuing 1,000 policies at a premium of 50 cents a week each." The attempt seems to have failed on account of the opposition on the part of some members of the trade unions, who were opposed to life insurance on any terms. The most important fact is the weekly -premium stipulation, and, 28 HISTORY OF THE PRUDENTIAL. while still far from being in the nature of Industrial insurance, we have here a form of workingmen's insurance tending dis- tinctly in the direction of what, in course of time, became known as life insurance on the Industrial plan. A somewhat similar arrangement was effected at about this time by the Metropolitan Life Insurance Company of New York, which insured the members of a German organization, the Hildise Bund, of Cincinnati, Ohio, and in an historical sketch of the company it is stated that "In the year 1869 and for many years thereafter the Company did a large business on the weekly- payment plan."* The agreement of the company with the Hildise Bund was ' ' to insure the lives of those who want to become members, if the risks are acceptable to the company, and charge therefor the regular rates. The Hildise Bund, which is a chartered institution, is charged for, and pays to the company the regular quarterly premium, and collects by its own treasurer the weekly dues from the members. No matter how these weekly dues are fixed, the Metropolitan never receives more nor less than the regular premium." It is clear, from official correspondence published in the Spectator^ that the company itself did not transact a weekly -payment business, but that the Bund paid to the com- pany the quarterly premiums collected weekly from the members, and that, strictly speaking, the company itself did not transact a weekly-payment business at this period. On a plan somewhat similar to the method of the Metro- politan, the New York Life Insurance Company in 1870 organized a society by the name of The Fortuna Life Insurance Society, as a branch of the New York Life, though as a separate organiza- tion, having for its object the insuring of the middle classes and receiving the premiums in weekly instalments. The society issued all the ordinary kinds of policies from $500 to $20,000, and the plan was especially designed to bring life insurance within the reach of the working population, and accommodate those who could best afford to pay their premiums on the weekly- payment plan. Whether this society ever actually transacted business does not appear from a careful examination of the history of the company published in 1895. * Souvenir Bulletin, p. 10. t Spectator, 1871, p. 352. INDUSTRIAL INSURANCE BEFORE 1874. 29 Another level-premium company which attempted a some- what similar plan was the Western New York Life, of Batavia, N. Y., which, through the Familien Schutz, transacted a business practically identical with the arrangement of the Metropolitan with the Hildise Bund ; and, as far as it is possible to judge, the Western New York Life Company also used the other concern simply as a soliciting and collecting agency. It was stated at the time that the Familien Schutz had been organized for the purpose of insuring its members against sickness and death by the payment of small weekly premiums, and by an agreement between the society and the company the latter was to receive the premiums collected by the former, and insure its members at the regular life rates, and otherwise aid in sustaining the society. The plan was stated to have been popular among the German population, and a considerable number of members seem to have been obtained in different States. Still another society on this order was the Bund ' ' Hilfin- noth," or New York "Help in Need" society, an organization having also for its object " the insurance of workingmen whose weekly incomes seldom furnish accumulation of sufficient size for the payment of annual or semi-annual premiums on life policies." The insurance through this Bund was furnished by the New York Life Insurance Company, but later, in 1875, by the German Department of the Life Association of America. Very probably the New York Life Insurance Company found the experiment an unprofitable one and turned the business over to the Life Association of America, which company failed in 1878. Gradually, however, the light was breaking, and the problem, of genuine workingmen' s insurance was being brought to the attention of the public with an ever-increasing degree of emphasis and force. The impending failure of the International Life of London, and the reinsurance of its American business, had drawn public attention to the Prudential of London, which company had assumed some of the outstanding risks of the International. The controversy was referred to at length in the Massachusetts insurance reports, and, as a coincident matter, public attention was once more directed to the great success of the Prudential Assurance Company. Another most important factor was the publication of a paper by Mr. (now Sir) Henry 30 HISTORY OF THE PRUDENTIAL. Harben on the history of the Prudential, read before the Institute of Actuaries of England, on April 24, 1871. The paper itself, and the learned discussion thereon by the foremost men of actuarial science of the time, attracted sufficient attention in the United States to induce a number of influential insurance journals to discuss the subject of workingmen's insurance on the Indus- trial plan from a new standpoint, and among the first to give considerable space to the new views regarding Industrial insur- ance was the Spectator ', which in its October issue for 1871 devoted considerable space to the system of Industrial insurance as prac- ticed by the London Prudential. I quote from the Spectator as follows : " How far, if at all, the English plan of industrial insurance is susceptible of application and development in this country must be a question for actuaries and managers to decide. That there are features of the system which commend it to the accept- ance of certain classes in the community, here as there, does not admit of doubt. But the reduction of these to practical use among us is a problem whose solution may not be very easy and must be a work of considerable time." As to the Prudential the Spectator further said : ' ' As we showed in the June number of the Spectator, the Prudential has attracted to itself and its system the attention of life managers everywhere, by reason of its immense volume of business and the systematic manner in which infinite details are kept well in hand. And the paper read by Mr. Harben before the Institute of Actuaries, some months ago, has brought the subject of industrial insurance so graphically and prominently into notice, as to indi- cate not only a new sensation, but a new departure in life insur- ance. ' ' That this new departure would, therefore, attract considerable attention in this country, and that there would be developed a local demand for some such institution in this country, which would both be convenient as to the premium payments and abso- lutely secure as to the payment of claims, was only a question of time. Inquiries, no doubt, were made during these years directly to the Prudential of London, for facts and information pertaining to the business, and it is on record in Mr. Harben' s own words to the Royal Commission on Friendly Societies in 1872 that "in America they want to adopt the Industrial system of insurance, INDUSTRIAL INSURANCE BEFORE 1874. 31 and I myself have framed an Act with all the necessary schedules for them for the purpose. ' ' * By June, 1872, the Prudential of London had 812,000 policies in force on the Industrial plan and 11,000 policies on the Ordinary plan of life insurance. In the whole history of life insurance no such result had ever before been accomplished, and well could the Spectator say of Mr. Harben, the master-mind of the Prudential, that "It is very obvious that Mr. Harben, the Superintendent of this colossal business, must be a man of remarkable organizing and administrative talent," and that " the Prudential is doing, upon wholesale principles, the most extensive retail life insurance business ever undertaken. But the results are certainly remarkable, and, thus far, they appear to bear the stamp of entire success." It remained for the Insurance Times to make itself the first pro- nounced and energetic advocate of the establishment of Industrial insurance in the United States. To the Insurance Times, and to its gifted editor, Stephen English, belongs the credit for having first placed the general facts pertaining to the practice of Indus- trial insurance before the insurance managers of the United States. From April, 1872, the Insurance Times never ceased dealing at length with the subject month after month ; page after page was devoted to Industrial insurance, and in the whole history of life or any other kind of insurance there is not another instance of a similar propaganda in behalf of a "new departure" destined in time to become the greatest business success of the age. In the July number of the Insurance Times the ' ' Irish Cor- respondent " of that paper, in a long and interesting communi- cation stated that he had learned from various sources that the subject of Industrial insurance, as set forth in the recent issues of the Times, was attracting considerable attention among the companies in the United States, and that he had been informed by the Secretary of the Victoria Assurance Society that Ameri- can companies were in direct communication with him on the subject, while "Mr. Harben has been applied to for all the papers of the Prudential ' ' ; hence the conclusion that ' ' You may, therefore, look out, I think, for another good result to American life insurance, arising from the facts and advocacy of the ' Industrial ' business in your journal. I am mistaken, or some of * Third Report, Q. 26,125. 32 HISTORY OF THE PRUDENTIAL. your New York companies mean to adopt the industrial system of monthly-premium payments." It was, however, an error on the part of the Times corre- spondent to speak of insurance on the monthly-payment plan as Industrial insurance. It can not be too often pointed out that Industrial insurance recognizes as two of its elementary principles that the premiums must be paid weekly and be collected from the houses of the insured ; but for some curious reason the Insur- ance Times, in its early advocacy of the cause of Industrial insurance in the United States, advocated the monthly-premium payment plan rather than the Prudential system of Industrial insurance on the weekly-premium payment plan. The increasing demand for workingmen's insurance on the Industrial plan is partly explained by the excessive mortality, affecting all age periods, which prevailed in the large cities, and es- pecially in New York and Newark at this particular time. The general death-rate of New York City, which had been exceed- ingly high during 1870 and 1871, having been 27.9 and 28.2 per 1,000, respectively, had increased to 33.0 per 1,000 of population during 1872. At the younger ages the mortality in 1872 was, in some instances, more than 50 per cent, in excess of the mortality for the previous year. The Insurance Times, commenting at length on the excessive mortality of children, discussed the prob- lem of child-life waste from various standpoints, advancing the conclusion that a very large amount of infant mortality was from preventable causes, especially malnutrition due to artificial feed- ing, the habit of drugging with patent preparations, and the general unsanitary condition of the dwellings. Unquestionably, New York City at this time was not a very healthy place to live in. Under such conditions life insurance for the whole family was becoming an almost absolute necessity. Nothing remained in many cases but pauper support during the last illness and pauper funerals for the dead. Pauper funerals in New York City, which had numbered 2,897 * n l8 7> na d increased to 3,502 in 1871, increasing still further to 4,086 in 1872 a point which was not reached again until 1891, when the population had almost doubled itself. While, no doubt, much relief was afforded by such of the aid societies as were temporarily in a solvent condition, these confined their burial assistance to adults, while the burial of children was practically unprovided INDUSTRIAL INSURANCE BEFORE 1874. 33 for ; and nothing was more natural than that, during such a period of distress, a considerable amount of attention should be given to a system of insurance which, in Kn gland, had accom- plished so vast an amount of good, and had done much, and was tending to do more, towards improving the condition of life of the industrial population. The practical results of Industrial insurance in England were of course familiar to many English emigrants who had come to this country during the past twenty years, and who, either as members of Friendly Societies, of Trading Collecting Societies, or of the Industrial insurance companies, had carried to this country considerable information of the actual results accomplished by family insurance in the old country. Another element making distinctly for an increasing interest in this form of insurance was the increasing public dissatisfaction with the existing forms of co-operative or other kinds of pseudo life insurance. While new organizations were being constantly organized, and while new movements were constantly set on foot, now for purely speculative reasons, now for secret-society purposes, or again for trade-society objects, all such move- ments ultimately proved disastrous experiences along the now well-recognized road which inevitably leads to insolvency and ruin. The frequency of failure among these numerous societies or associations granting sick benefits and promising sums payable at death attracted the attention of Insurance Commissioners in nearly all the States of the Union. Hardly an official report was issued by a State official in charge of insurance matters but atten- tion was called to the increasing danger of a great public loss and subsequent calamity resulting from the ill-advised schemes under the name of co-operative life insurance. Thus, in the report of the Missouri Superintendent of Insurance for 1872, reference is made to the delusive plan of co-operative life in- surance as one demanding some action by the legislature, and the words of warning concluded with the remark that "They are mentioned again because in the West this form of insurance is making headway, seriously to the detriment of the public good." The time for establishing an Industrial insurance company in the United States had, however, not yet arrived in 1872. The fundamental principle underlying Industrial insurance, as well 34 HISTORY OF THE PRUDENTIAL. as all other legitimate forms of life insurance, is that the first and most essential element of insurance is safety ; * but at this period of insurance history the masses had not yet realized that so-called "cheap" insurance, or "insurance at cost," as transacted by men ignorant of the principles and practice of the business, could prove only a delusion and a snare. Time only could remedy these evils and replace worthless institutions by worthy ones. It was as yet too early to establish a com- pany solely on business principles, offering insurance as a matter of contract, without any pretense of a pseudo-philanthropy ; for there was still a belief that somehow, some way, the magic word " co-operation" would solve a problem which, for its true solution, required exceptional ability, courage, patience and unremitting toil, devoted to the achievement of a single purpose. The Insurance Times continued its efforts in behalf of the dissemination of information in the United States as to the value and importance of the English method of Industrial insurance. Unquestionably, the current hearings, or taking of evidence, before the Royal Commission on Friendly Societies (1871-' 74) had much to do with the growth of an American sentiment in favor of insurance for the masses on the plan of family insurance, so suc- cessfully developed by the British Prudential. Mr. Harben's testimony given in 1872, no doubt, had come to the notice of American insurance managers ; and while there remains no trace of an effort to establish an Industrial insurance company during 1872, there is evidence of such an attempt having been made in Columbus, Ohio, during the early part of the following year, where, according to the hisurance Times of February, 1873, the " Prudential Life Insurance Company, with a capital of $200,000," was in progress of organization. This proposed company, how- ever, seems never to have come into a corporate existence at least, there is no record, in the report of the Insurance Depart- ment for that year, of such a company ever having been incor- porated in Ohio. In its March issue for 1873 the Insurance Times discussed some of the evidence given before the Royal Commission, and * Life insurance has properly been defined as "a present means of obtaining a certain advantage over an uncertain event." INDUSTRIAL INSURANCE BEFORE 1874. 35 restated its former position in favor of Industrial insurance for the American industrial masses, as follows : " The very first new L,ife Insurance Company that ought to be established in the United States should be one of this class for Industrial business. The field is open to be worked to an unlim- ited extent. It would be found to be one of the most successful fields ever cultivated for L,ife Insurance in this country." While practical minds, familiar with insurance matters, were thus considering the question of workingmen's insurance from a standpoint of fact and expediency, at least one of the leading economists of the period, Mr. Amasa Walker, advanced arguments in favor of government life insurance, on the ground that "the State is bound to afford protection to the lives and property of its citizens, arid any act on its part necessary to the full realiza- tion of this great object is not only right and proper, but obliga- tory "; and, in Virginia, it was Mr. Henry A. Wise who, in his gubernatorial campaign, announced himself unconditionally in favor of life insurance by the State. He advocated such a course, not because it was likely that the State would offer superior plans of insurance at lower rates than those charged by private companies, but because the State was in a bank- rupt condition, and he had hopes that the government would thus be able, by the means of life-insurance profits, to " recruit its exhausted or insufficient resources." The Insurance Times properly explained that life insurance was the last thing in the world that an unsettled government should indulge in, and it is much to the credit of the Legislature of Virginia that they ' ' were not to be deluded by the specious aspects of the bill presented for the incorporation of the scheme, and very prudently laid it in the limbo of countless similar visionary plans for ameliorating the condition of the human race." That there was a local demand in Virginia for the extension of the principles of life insurance to the masses is illustrated by a peculiar experiment in insurance attempted at the same time that the question of insurance by the government was seriously under discussion. Quoting from the New York Evening Mail of 1873, Cornelius Walford, in the Insurance Cyclopedia (Vol. V., p. 165), states that a Richmond (Va.) newspaper during this year advertised the Undertakers and Burial Insurance Company, which offered ' ' to agree to furnish promptly to all persons in good health, under forty years of age, for $i per annum," the insurance 36 HISTORY OF THE PRUDENTIAL. " needful for a funeral." For some reason or other this experi- ment, which in later years was frequently repeated, seems, then as now, to have fallen short of success. Still another form of life insurance for the masses had been devised by the Hon. Emerson W. Keyes, the author of a work on the history of savings banks and one of the directors of the American Popular Life, to whose weekly-payment plan previous reference has been made. The plan of Mr. Keyes was a combi- nation of the principles of life insurance and the methods of savings banks, and had, in the words of the editor of the Monitor (1873), "sound sense and reason to commend it " ; but, as a matter of fact, as a form of family insurance the method was faulty and useless for the purpose of family protection, since it was practically nothing but term insurance, providing life insurance for a specified period of years. A somewhat similar plan was advo- cated some years later by Mr. Elizur Wright, but both methods of combining a savings bank with a life-insurance company proved failures and practically impossible. As early as 1870 the Peabody Life had offered a peculiar plan of savings-bank insurance to the public, originated and copyrighted by H. H. Hadley, the vice-president of the company. According to the Monitor, Mr. Hadley had devised this plan "for life insurance among people of small means, to be consummated by daily or weekly deposits of small amounts." Nothing, how- ever, came of any one of these attempts, too fanciful in theory to be useful in practice. Neither Keyes's Labor-Term Insurance nor Hadley 's Savings-Bank Plan seems ever to have been adopted by any responsible company, and, as far as I have been able to learn, no policies seem ever to have been issued covering the peculiar provisions incorporated in these attempts, which, however, are of historical value in view of Mr. Keyes's undoubted ability as a writer on savings-banks history and Mr. Hadley 's later connec- tion with a somewhat similar effort which, by a narrow margin, failed to prove a success. Mr. Hadley seems to have been a man of strong convictions on the subject of life insurance for the masses, but wanting in technical knowledge and practical ability to grasp the fundamental principles of Industrial insurance. Not discouraged by his failure to make a success of his savings-bank plan through the Peabody Life, he made another effort through the Missouri Valley Life, of Leaven worth, Kansas, to furnish some sort of reliable indemnity INDUSTRIAL INSURANCE BEFORE 1874. 37 to the insuring public. The plan of this company was to issue policies for $100 each, in form and appearance resembling a greenback. The premium was uniform for all ages, while the duration of the policy was graded according to age, being, in other words, a term policy, somewhat in the nature of the plan advocated by Mr. Keyes. While the company called this form of insurance " Industrial " insurance, it was neither that nor whole- life insurance in any form. The plan was inherently weak, and to a considerable extent a deception, in that it opened a very- inviting and practicable field for fraud. The Insurance Times in 1873 well spoke of this plan as "one of the most objectionable attempts at insurance that has ever been placed before the Amer- ican public." The Missouri Valley Life, however, transacted a not incon- siderable amount of business on this plan, and issued as many as 8,000 policies during 1874, 5,700 policies during 1875, and 3,200 policies during 1876 ; but thereafter the business dwindled down to nothing, the company discontinuing active business operations in August, 1877. The failure of the Missouri Valley Life to make a success of this form of insurance was due entirely to the inherent weak- ness of a scheme which in all essentials was the very opposite of Industrial insurance as practiced by the British Prudential. The experiment, however, gave proof that there was a strong demand for life insurance in small amounts and on a convenient method of premium payments, and it was now only a question of time when the essentials of success in this direction would be fully recognized in the success of the British Prudential. Naturally, such further efforts were most likely to be made in the large cities of the East, where the industrial conditions were more favorable to the extension of the principles and practice of Indus- trial insurance; and early in 1873 a society was organized with this end in view, in Newark, N. J., which in a few years was destined to become the corner-stone of the present Prudential Insurance Company of America. According to the Insurance Monitor for July, 1873, "The Widows' and Orphans' Friendly Society was chartered this year, under date of April 3rd, by the New Jersey Legislature," for the purpose of placing "the blessings of life insurance within the reach of those classes whose narrow means restrict them to the payment of monthly premiums. ' ' It was further explained 38 HISTORY OF THE PRUDENTIAL. that "the clerical labor has generally been found too great to admit the adoption of this method by the companies directly. But, through the aid of an auxiliary society of this kind, the end can be accomplished, and all the benefits of legitimate insurance can be secured by those who, if they are inclined to insure at all, fall a prey to co-operation, or are forced to join some benevolent organ- ization." This society had made an arrangement with the Piedmont and Arlington Insurance Company for insuring the members by means of a saving-fund policy at ordinary life rates, in other words, it did not differ materially from the numerous forms of Unions or Bunds previously dealt with, and which had for their object the insurance of working people in substantial Ordinary companies through the medium of fraternal or bene- ficial societies acting as soliciting and collecting agencies. As has been stated, most of the Unions or Bunds were of German origin, and the largely Teutonic character of The Widows' and Orphans' Friendly Society is indicated by the names of the men who organ- ized the same, and of whom it can be said, with all truth, that "they builded better than they knew." Of the actual business transactions of this society, the objects of which were well defined as assistance in sickness and aid in defraying the funeral expenses of deceased members, few facts have come to my notice. It is very doubtful whether the society ever transacted business on an extensive scale, probably finding it difficult, as similar societies had, to do business by a method at once clumsy as to practice and inherently weak as to insurance methods and principles. The permanent interest in this society and its historical value are to be found in the fact that on February 18, 1875, the name of the society was changed to The Prudential Friendly Society, which title was further altered in 1877 to the present name The Prudential Insurance Company of America. INDUSTRIAL INSURANCE IN AMERICA IN 1874. 39 CHAPTER IV. INDUSTRIAL INSURANCE IN AMERICA IN 1874. The beginning of Industrial insurance in the United States must be fixed on the date on which the name of The Widows' and Orphans' Friendly Society was changed to The Prudential Friendly Society, of which Mr. John F. Dryden was made the first secretary, as he had been instrumental in bringing about the reorganization and the establishment of the new society on actuarial principles, identical in all respects with those which underlie the transactions of the large and successful Ordinary life companies of this or any other country. Of the events affecting life-insurance history during the two years which passed from the date of the charter of The Widows' and Orphans' Society to the date of the foundation of The Prudential Friendly Society only brief notice can be taken in our historical survey of the facts relating to the origin and growth of The Prudential Insurance Company of America. The Insurance Times continued to call public attention to the subject of Industrial insurance by publishing from time to time tables and other data pertaining to the practice of the British Prudential. Such information must needs have been of vital interest to those who at this early period were considering the expediency of establishing an Industrial insurance company in the United States. It is much to the credit of the Insurance Times that it early recognized the inexpediency of uniting the objects of Industrial insurance with those of regular life-insurance companies operating on the Ordinary plan, warning American life companies to rigidly avoid any and every attempt of this kind.* * The importance of this suggestion lies in the fact that the combina- ' tion of Industrial with Ordinary insurance was likely to prove a hindrance to the development of the former in that the latter being already estab- lished, the former would receive but little attention. The Prudential Insur- ance Company being free from this burden in the beginning, was, therefore, enabled to develop every technical feature of the business to a high degree 40 HISTORY OF THE PRUDENTIAL. In the September issue of the Insurance Times for 1873, this warning was repeated in the following words: "Hundreds of thousands of policies can at once be issued by any responsible company that will bring the business fairly before the public as a special feature. It can never be well done through any secondary organization." But even the Insurance Times had not yet recognized the essential difference between Industrial insurance on the plan of the British Prudential and Ordinary life insur- ance transacted on the monthly-premium payment plan, being Apparently more in favor of monthly payments than in favor of genuine Industrial insurance, in which the payments are made weekly and collected from the houses of the insured. By the end of the year 1873 the establishment of genuine Industrial insurance was, therefore, apparently, as far off as ever, and as late as November, 1873, the Insurance Times lamented the fact that, in spite of all the arguments advanced and all the rich promises of reward, no company had come forward to follow its advice, and there is no record of any serious effort to organize an Industrial insurance company during the year. The confusion of ideas as to the true nature of Industrial insurance on the part of the Insurance Times, in advocating a system of monthly-premium payments, is one which can be explained largely on the ground that life-insurance ideas in general were still in a very primitive state. This is apparent from another confusion of thought which is only too often made in well-intentioned remarks on life insurance even at the of perfection before assuming the burdens of Ordinary insurance. The Ordinary insurance companies which attempted to transact an Industrial business as a side issue invariably failed to make a success of the business and discontinued the Industrial Branch after a few years of experiment in this direction. On the other hand, the Ordinary companies which attempted to transact an Industrial business and for the time being devoted all their energies and efforts to the successful transaction of the Industrial business succeeded in this direction, but for the time being fell materially behind in their Ordinary business. While, therefore, inherently there are no reasons why an Ordinary company should not transact an Industrial business, practically it was desirable that the business should be first taken up by a company devoted exclusively to the transaction of the Industrial business. Hence, the fact that Industrial companies to-day transact a very large volume of Ordinary business is not to be considered as a contradiction of the warning note of the Insurance Times> which was fully justified by the conditions existing at the time the article was written. INDUSTRIAL INSURANCE IN AMERICA IN 1874. 41 present time. Speaking of life insurance for the poor and people of small means who need insurance protection most, the Insurance Times, in its issue for December, 1873, pointed out that ' ' The benefits of life insurance are peculiarly designed for persons of moderate means. As charitable institutions, the companies ought, from motives of public spirit, to make it one of their principal objects to make small policies readily accessible." No error can be more serious and at the same time more self-evident than that life insurance is in any sense a charity, for, to the contrary, it is, in all respects, a business enterprise identical with banking or any other form of com- merce. Through life insurance an immense amount of misery is alleviated and an incalculable amount of human suffering pre- vented, but it is not as a charitable agency that life insurance has brought about this much-to-be-desired end. To confound life-insurance companies which are social institutions, making for social and economic independence with charitable institu- tions, the best of which must always, even though in a most subtle manner, make for individual dependence,* is an error which can not be too much deplored, and one to which, I be- lieve, are due most of the sins of legislators who look upon life- insurance companies as semi-charitable institutions which should grant unheard-of favors and gratuities, cash-surrender values, and paid-up policy provisions in excess of the actual values which a company may have on hand or have received for the purpose of meeting its contracts. This error was repeated in the Massa- chusetts Insurance Report for 1873, in the statement that " I/ife insurance seems to have lost the character of a purely benevolent institution, and has begun to assume that of a mere speculation. ' ' As a matter of fact, life insurance at no period of its history has had the character of a purely benevolent institution, and had not, at this period, assumed the character of a speculative enter- prise. The Insurance Times (Dec., 1873), however, fully recog- nized the true nature of life insurance in its interpretation of the character and objects of the British Prudential in the statement that " the Prudential is a company which makes no loud-sounding * " I fully believe that to-day the next most pernicious thing to vice is charity in its broad and popular sense." (W. G. Surnner.) "The number of our almshouses, asylums and charitable institutions of all sorts, of which we boast so much, is really our shame." (R. T. Ely.) 42 HISTORY OF THE PRUDENTIAL. pretensions it makes no parade of philanthropy, and of its wish to benefit the human race." This company says, in substance, "We are business men, and must be paid for our trouble; we therefore charge an extra premium for extra trouble, and collect- ing money shilling by shilling involves no little extra trouble. But in return we guarantee you as much absolute security as is enjoyed by those who have large sums to invest," and hence the conclusion that ' ' If the amounts which were actually paid to workingmen upon the occurrence of death by the life insurance companies during the year 1872 *are compared with the relief afforded within the same period by the friendly societies, it will be found that the insurance companies have proved in practice far the more beneficial," * and the further conclusion that "The Prudential Assurance Company [of London] has not only enlarged the vSphere of life insurance, but has conferred a substantial benefit upon the working classes. We can readily appreciate the feelings of pride with which the directors of the company, in look- ing back upon the splendid success which has been achieved by the company during the past year, claim that their triumph is one of the most memorable that has ever been gained by any life insurance company," and to these remarks the Insur- ance Times adds, " We urge once more, as we have already urged before, the speedy establishment of a good industrial insurance company in New York." Reference has been made to numerous attempts to combine the functions of a savings bank with the functions of a life-insur- ance company, and one reason why so many of these projects originated at just about this time is to be found in the fact that, in consequence of numerous failures of Ordinary life companies, savings banks were held in higher esteem among the working classes than the numerous life-insurance projects of the period. Once more a distinct antagonism of life-insurance companies to savings banks was developed, but, as was pointed out by the * In a paper read at the International Congress of Charities, held in Chicago in 1893, it was pointed out that in the town of Rochdale, out of a total sum of ^23,952 paid out for funeral expenses, ^19,493 was paid by Industrial companies, while the local Friendly Societies contributed ^4,027 and the Trades Unions ^432. Thus it was shown that in a town recognized by economists as one in which thrift institutions of all kinds have prospered most, Industrial insurance holds to-day first rank as a means of providing for the expenses of burial and incidentally for the cost of the last illness. INDUSTRIAL INSURANCE IN AMERICA IN 1874. 43 Monitor and other insurance journals, the one class of institu- tions had never seriously interfered with the other, and, " on the contrary, it is more likely that the business of each has been larger on account of the other's existence." However, as I have had occasion to point out, habits of systematic saving had not been extensively developed in the industrial population previous to 1875. The difference between savings banks and insurance companies is essential. The savings bank represents a different form of voluntary thrift from that of the insurance company. The depositor is not required, and is not induced to deposit weekly or monthly, the surplus of his income over his expenses, but, once he becomes a life-insurance policy-holder, a certain degree of compulsion forces him to make premium payments weekly, quarterly, semi-annually or annually, as the case may! be. This essential difference between savings banks and life- insurance companies should be better recognized than has thus far been the case, and from this point of view, I feel satisfied that insurance companies, especially Industrial insurance companies, represent a more distinct form of thrift promotion than the ordi-J nary savings banks. Previous failures to combine the two thrift functions into one had not discouraged those who were more favorably inclined towards savings banks than towards life-insurance companies. Among those who made the most determined, as it was in a measure the last, effort to establish savings-bank insurance was Mr. Elizur Wright, the well-known actuary and former Insur- ance Commissioner of Massachusetts, who in 1872 commenced an agitation in favor of a Family Bank,* which, though devised by one experienced and familiar with life-insurance theories and practice, was at once as vicious and as weak as any method which had ever been devised to develop both objects of savings and insurance. In advocating his plan of savings-bank insur- ance, Mr. Wright went to such extremes that in the end he became the open antagonist and enemy of all forms of life insur- ance, conveying to the public the idea that ' ' the system of life insurance as generally conducted was a humbug and wrong, iniquitous and deceptive, unfair to the policy-holder, unsafe to the companies, and altogether behind the age, and unworthy of the American people." The attacks on life insurance made by Politics and Mysteries of Life Insurance, Boston, 1873. 44 HISTORY OF THE PRUDENTIAL. Mr. Wright induced Mr. Knglish, the editor of the Insurance Times, and a life-long friend of Mr. Wright, to express himself in an open letter as follows : ' ' The failure of your attempt to foist your scheme upon the life-insurance companies was followed by your bitter and unwarrantable attacks upon the life-insur- ance system and companies of America. You have left nothing undone, unsaid and unpublished, to destroy public confidence in all the life companies, and, if possible, to ruin the business' ' (Insur- ance Times, September, 1874). It would be difficult to frame a more severe and just condemnation than this. Mr. Wright's plan was never carried into actual practice, but it is claimed, by those who are familiar with the facts, that some of the companies which embodied some of Mr. Wright's theories into their practice, and which were guided by his advice, were unable, in consequence 01 his unsound theories, to meet their outstanding contract obliga- tions, to the serious disappointment of the thousands of widows and orphans who were thus deprived of their legitimate support. While, by the close of 1874, the problem of life insurance for the masses had, no doubt, received more serious and thoughtful recognition than ever before, no one seems to have had the cour- age to undertake a task which gave every indication of failure and very little assurance of success. As an indication of the attitude of experienced life managers towards the new system of insurance, by this time so success- fully practiced in England, I quote a few remarks from inter- views reported in the Spectator during the first half of the year 1874. These interviews are very suggestive in the light of future events, and I abstract a few replies which are of special importance. In answer to the question put by the Spectator, l ' Do you think that this system can be made to furnish safe insur- ance?" Mr. Heber Smith, the Vice- President of the Northwestern Mutual Life Insurance Company, replied : " I have not become familiar enough with the principles underlying the ' industrial ' scheme of life insurance to speak definitely regarding its adapta- bility, but from what I know of it, I have no desire, as an officer, to experiment with it" (January, 1874). In reply to the same question Mr. Samuel H. White, Vice-President of the Charter Oak Life Insurance Company, replied: "So far as I have examined the plan, I think it impracticable, unless the sole object is for the poorest classes to provide a ' burial fund.' Practically, it can not do much good" (February, 1874). Mr. Nathan D. Morgan, INDUSTRIAL INSURANCE IN AMERICA IN 1874. 45 President of the North American Life Insurance Company, re- plied to substantially the same question, "I would promote, in every proper way, a habit among the poorer classes of in- vesting a portion of their earnings in life insurance. Some mode should be devised for doing this at less cost than under the present agency system" (May, 1874). Thus it appears that some of those who were in a position to know either did not favor the plan, or but imperfectly understood the essential prin- ciples of the theory and practice of the system, while no one seems to have had the courage to undertake the formation of a company designed to transact Industrial insurance, even in connection with, or as a part of, the business of an Ordinary life company. While the insurance press continued to give considerable attention to the general subject of Industrial insurance, the Insurance Times, more than any other publication, continued its advocacy of the system, and of the establishment of an Indus- trial company in the United States. The editor, Mr. Stephen English, not only gave space to the general discussion of the principles and practice of the business, but supplemented such theoretical discussions with practical demonstrations of the bene- fits and results of Industrial insurance from the standpoint of public policy. In an article entitled ' ' The Progress of Industrial Insur- ance," the Insurance Times (April and May, 1874) pointed out the educational influence of this work among the masses of the people as in itself a matter of importance and of immense value. In explanation, the statement was added that "Year after year these thousands of artisans and operatives, thus effecting insurance on their lives, are taught thriftiness, carefulness, prudence, and fore- thought. The very fact that these thousands of workingmen are induced to make timely provision against the day of death, by life insurance, for even ever so small an amount, is a proof that the recklessness, selfishness, and spendthrift habits of these men are giving way before better influences, and that the future of their homes and families is of more consideration to them than to any of their class in days gone by. ' ' A more worthy and deserved tribute has seldom been paid to the English workingmen than in the above lines, written by one who, although unknown to the American working people, yet rendered them a most important ser- vice, and to him Industrial insurance owes a debt of gratitude, as one who during a dark hour of American social history did much, if not most, to keep the facts pertaining to Industrial insurance 46 HISTORY OF THE PRUDENTIAL. before the public, and who, in spite of discouragement, did not despair of seeing his ambition realized by the early establishment of an American Industrial insurance company. It was otherwise with Mr. Blizur Wright, who, for rea- sons which will probably never be known, had been opposed to Industrial insurance almost from the time the system had been gaining ground in England, and who, as far back as 1865, had been making attacks on what he called Industrial insurance, but what in reality was the old system of Burial Societies, which was then rapidly" passing away, giving place to the modern form of workingmen's insurance on the Indus- :rial plan. In an open letter to the editor of the Insurance Times, dated May 26, 1874, Mr. Wright summed up his charges against Industrial insurance, stating that it was his conviction that "the evil of Mr. Harben's gigantic success decidedly outweighs the good." Among other charges Mr. Wright asserted, as a matter of fact, that the system was one productive of infanticide, that the companies were living on lapses, and that the general system was an iniquitous one, and practically of no further benefit than that it was profitable to Mr. Harben and the stockholders in the Prudential. Mr. Wright confined himself to generalities, making, however, specific charges without a single statement of fact, and, though himself an actuary, he expressed an actuarial opinion without actuarial testimony or facts to support it. He referred to Mr. Gladstone's remarks in 1864, to the effect that the Pruden- tial was insolvent, but he did not say that these remarks of Mr. Gladstone's had been refuted and proven unfounded by the high- est actuarial authority in England, the President of the Institute of Actuaries. He repeated the thirty-year-old charge of child- murder for insurance money, occasionally made against the old- time type of Burial Clubs, without citing a^single case in support of his monstrous allegations. Mr. Wright was immediately answered by Mr. James Alex- ander Mowatt, a man thoroughly familiar with the practice of Industrial insurance in England, and also, under date of June 23rd, by Mr. Harben, who, in an open letter addressed to the editor of the Insurance Times (published August, 1874), emphati- cally and ably refuted the charges made by Mr. Wright by a simple statement of the facts in the case. Mr. Harben concluded his letter with the following remarks, which I quote as they are INDUSTRIAL INSURANCE IN AMERICA IN 1874. 47 likely to be of permanent interest to the student of the develop- ment of Industrial insurance in this country : "The theory that a working man should be prohibited from insuring the means of burying his child because the sum of thirty shillings (seven and a half dollars) will tempt him to commit murder, hardly needs serious discussion.* Can Mr. Wright support this argument by the slightest trustworthy evi- dence ; and if he can, is murder for the sake of insurance money confined to 'the poor,' because, if not, why not go further? ' ' Why do the critics of this Company always speak in gen- eral terms ? Why do they not make some definite charge against it, and instead of confining themselves to * ' may-bes ' ' and ' ' no doubts," point out any engagement broken, any benefit with- held, or any promise unfulfilled ? But no ! The Prudential Company may have faithfully performed every engagement into which it has entered ; it may have opened up a new source of joint-stock enterprise ; it may have brought the benefits of life insurance within the reach of the humblest classes ; but it has not justified the predictions that would-be-prophets made by egregious failure. It has committed the unpardonable crime of success." To these distinct and well-supported charges of inconsistency, ignorance and perversion of facts Mr. Wright made no reply, except in a rambling communication under date of August i4th, in which he once more shifted the burden of proof to generalities not deserving of space. This unworthy attempt to evade the real points at issue, brought forth a most emphatic and scathing reply from Mr. English, the editor of the Insurance Times (September, 1874), who expressed himself, in part, as follows: "You have, upon your own admission, made mistakes in your attempts to reform life insurance, and your blunders have made the insurance fraternity mistrustful of your theories and experiments. The officers of our life companies would be recreant to their fiduciary duties if they allowed themselves to be bullied into an acceptance of y'our scheme, and they onl)?" show a proper and manly spirit in * "The time has passed for dealing with the masses as children who are to be treated to truth in quantities and on occasions suited to their welfare or the interests of society. The political economist only aban- dons his ground of vantage and forfeits the confidence of the community when he accepts any responsibility for the use that may be made of the truth he discovers and discloses." (Francis A. Walker.) 48 HISTORY OF THE PRUDENTIAL. resenting your misrepresentations and decrial, by letting you con- temptuously and severely alone. ' ' Industrial insurance can not be said to have been injured by this controversy, and the subsequent correspondence on the subject. Clear and emphatic proof had been produced that the system was not only worthy of public confidence, not only met a great public want, but, also, could be undertaken on a business basis, and was likely to produce a fair rate of profit in return. Forces, independent of the agitation of the Insurance Times, were making for a better public understanding of the subject, and tending towards a more clearly recognized necessity for the estab- lishment of genuine Industrial insurance in the United States. While, as we have seen, Mr. Wright, as a former Commissioner of Insurance of Massachusetts, had proclaimed himself an open and uncompromising opponent to the introduction of the system, another Massachusetts Commissioner, Mr. Julius Clarke > in his annual report for 1874, came forth plainly and emphatically in favor of the system of Industrial insurance as practiced by the British Prudential. In this report, which must ever be looked upon as one of the foundation-stones of the present-day structure of American Industrial insurance, Mr. Clarke addressed the Legis- lature as follows : ' ' In presenting to the Legislature a general view of the dif- ferent matters of interest and importance relating to insurance, which have attracted attention during the last year, reference should be made to the subject of industrial insurance. The term is applied with sufficient appropriateness to insurance for small amounts, supposed to be particularly adapted to the wants of persons of small means, who are engaged in various industrial pursuits." After giving a brief historical sketch of the origin and growth of Industrial insurance in England, Mr. Clarke dealt with the practice of the British Prudential, and pointed out that 1 ' Though it does not, like the old Friendly Societies, guarantee allowances in sickness, yet like them it adjusts the amount of insurance to the premium paid ; that is to say, instead of naming certain sums as the premiums for which it will insure the payment of ten, a hundred or a thousand pounds at death, it offers certain amounts of insurance in return for the payment of small fixed sums each week ; such as one penny, twopence, threepence or fourpence, as the case may be. Like the Friendly Societies, also, the company sends its collectors from house to house and collects INDUSTRIAL INSURANCE IN AMERICA IN 1874. 49 the premiums weekly." Thus Mr. Clarke had thoroughly and completely grasped three of the four essential principles of Indus- trial insurance, the charge of a weekly premium, the adjustment of the amounts of insurance to this weekly premium, and the col- lection of the premium weekly from the house of the insured, and, as we shall presently note, he had not overlooked the fourth essential, the principle of family insurance that is, of persons of both sexes and all ages. Mr. Clarke did not fail to recognize the historic continuity of the business and its direct relation to the Friendly Societies and earlier forms of burial associations. In his own words, ' ' The secret of the success of this company may be found in the fact that the ground had been thoroughly prepared for the new system by the old societies. The company merely takes advantage of tradition, habits and ideas that have been the growth of more than a century. In their adoption and application it is hoped that the company will not, like so many Friendly Societies, prove in the end a failure." In explanation of the fourth cardinal principle of Industrial insurance, that is, the insurance of every member of the family, and incidentally the insurance of children, Mr. Clarke stated that "One of the objections made to the Company's mode of doing business, is, that it grants insurance upon the lives of young children. This was the practice of the Friendly Societies, and in regard to them, also, the objection was urged that the practice held out inducements to infanticide. The managers of the Friendly Societies contended in reply, that the character of poor people is not such as entitles the objection to weight, and for the credit of human nature it is hoped they were right. They main- tained further, that even if the danger existed, which they denied, it might be amply guarded against by requiring proper medical examinations and certificates. The contract of life insurance being unlike that covering a fire or marine risk, a contract of indemnity, it is not absolutely necessary that the interest in the life insured should be of a pecuniary nature. The parental rela- tion in itself is all that is required to support the contract. Were a pecuniary interest requisite, life insurance might still be properly invoked to provide against extraordinary expenses forced upon a poor man by sickness or death in his family, as well as to compen- sate him for the loss of aid and assistance derived from the J 50 HISTORY OF THE PRUDENTIAL. services of his child." This extended quotation shows how carefully Mr. Clarke had gone into the facts of the case, and how well he had considered the pros and cons of a question to which there were bound to be at least two sides. Mr. Clarke had also 'considered the question of cost and the expense rate of transacting an Industrial business, stating that ' ' It has also been stated that the rates charged by the Prudential upon its small policies, are unreasonably high in proportion to those usually charged upon policies of larger amounts ; also that it makes no dividends, and pays no surrender values"; but, he adds, " it is unnecessary for our purpose to examine in detail the Company's mode of doing business, if the prices it charges are out of proportion to the benefit it confers, the proper ratio will ere long be established by competition." Mr. Clarke recognized fully that stability was the main point in regard to all institutions created for the purpose of insurance, and especially so in the case of those designed to bring life insurance within the reach of the masses. Quoting his own words, ' ' The number of persons whose happiness is staked upon the solvency of institutions of the latter class is larger, and they are persons whose situation is such that the distress produced by disappointment is more cruel. " It is clear that Mr. Clarke realized fully that the most vital element in Industrial insurance is the absolute necessity that such insur- ance shall be of the same intrinsic value as life insurance on the Ordinary plan sold to the well-to-do, leaving the question of cost and the expenses of conducting the business, w 7 hich consists of a multitude of intricate transactions, to .the people themselves and to the law of competition which regulates profits in similar busi- ness undertakings. Extended consideration was thus given by an intelligent Insurance Commissioner to a business which had not yet been established in this country, and his views were communicated to the Legislature of Massachusetts solely for the purpose of placing before the people of the State the facts pertaining to a business which, from his point of view, was one of great public benefit, and which was deserving of attention from the stand- point of public policy. His opinion as to whether the time had come for the organization of such companies in this country, is expressed in the following quotation : " It does not of course neces- sarily follow, that because there is a demand in England for small INDUSTRIAL INSURANCE IN AMERICA IN 1874. 51 policies, as shown by the experience of the Benefit Societies and the success of the Prudential, that therefore a similar demand exists in this country. Various circumstances, however, indicate that the want exists here also. As one of these, may be mentioned the great variety of forms in which what is called co-operative insurance crops out. This Department has long been and still is greatly embarrassed by the frequent attempts to impose this co-operative fallacy upon the community, and all the more so because they are often made by people of most excellent inten- tions and unimpeachable respectability. Though co-operative insurance sometimes resembles industrial insurance in the small- ness of the amounts in which it is furnished, it is in substance essentially different. ' ' All the different contrivances practically adapted for the \ promotion of saving, among which life insurance is to be consid- ( ered one, are deserving of encouragement. They increase the capital of the community, indispensable for the organization of industrial enterprises, and aid powerfully in the development of the material wealth. / Numerically the people of small means form a large part of the population, and their contributions, although humble singly, are in the aggregate of importance. Any accumu- lation of means which inures for their benefit is valuable, not only on account of the capital which it furnishes taken collectively, but j also because it brings improvement to precisely the very people j whose material condition stands most in need of it." And, finally, ' * The further extension of life insurance in Massachusetts is no doubt a subject of so much importance, that it might very properly occupy the attention of the Legislature. But it is very doubtful whether the Legislature could devise any measures that would be of service, in aiding directly in the introduction of indus- trial insurance. Fashions, however, are so contagious that it is not unlikely that some attempt may be made to introduce here a kind of insurance at present so popular abroad. Should this be the case, it is highly desirable that legislation should establish all proper precautions against insolvency and fraud. ' ' The report of Mr. Clarke could hardly have become generally known until after the first half of the year 1874, for, as is usual with public documents, they are printed and distributed to the public some months after the close of the legislative session ; hence it is not strange that it was not until the latter part of the 52 HISTORY OF THE) PRUDENTIAL. year that a new and apparently energetic effort was made to carry the frequent suggestions of the Insurance Times and the more recent suggestions of Commissioner Clarke into actual execution. In the Insurance Times for October, 1874, is a notice of the proposed organization of a company contemplating the transaction of an Industrial business, which I quote as follows : "The appeal made by Commissioner Clarke, in behalf of the requirements of the industrial classes with respect to life insur- ance, has met with a prompt response from the capitalists of this city [New York]. Progress has already been made in the organization of a new life company, to be entitled the " Prudential Insurance Company of America," to be conducted on a plan similar to that of the Prudential of London, which has been attended with so much success and benefit to the indigent work- ing classes. ' ' Despite the preceding businesslike announcement, nothing seems to have been done to effect an organization, and there is no record that the company was ever incorporated and authorized to transact business, but there is a brief notice in the December number of the Insurance Times (1874), indicating that the pro- jected new company had difficulties, perhaps on account of its in- ability to raise the necessary capital of $100,000, with which it was proposed to organize. It would be interesting to know who were the promoters of the enterprise and why the same failed in its earliest stages without having had, at least, a fair trial, but there is no record of the names of those who made this second attempt to organize a Prudential Insurance Company of America, and thus, at the close of 1874, Industrial insurance was still a probability, but with every assurance of early realization. The report of Commissioner Clarke attracted considerable attention outside of Massachusetts, and came to the notice of Mr. John F. Dryden, who for some years had given considerable attention and thought to the study of Industrial insurance. Mr. Dryden must needs have been strongly influenced by so urgent a plea for the organization of an Industrial insurance company, coming from a source free from bias or prejudice, and from a man fully capable of dealing with so intricate and highly involved a subject. It is often argued that the unstinted praise of Industrial insurance, its methods and results, on the part of the press in INDUSTRIAL INSURANCE IN AMERICA IN 1874. 53 general, and the insurance press in particular, is due to the fact that the Industrial companies are advertisers in these journals, and that the latter are, therefore, interested advocates or special pleaders. Unwarranted as this opinion is, it has much semblance of truth, in that newspaper praise is, unfortunately, too often the result of a personal interest, while, conversely, newspaper fault- finding is too often the result of personal spite or prejudice ; but here we have overwhelming proof that before a single Industrial company was organized in the United States, the more intelli- gent insurance press, and especially the Insurance Times, devoted columns and pages to the discussion of the new form of life in- surance, which certainly brought not a cent of direct compensation to the owners or managers of this particular journal ; and we find the leading Insurance Commissioner of the United States, in 1874, making a special plea in six pages of his report, long before an Industrial company had ever paid a dollar in taxes or license fees to the Department of Insurance of his State. Surely this may be accepted as proof that the system was early recognized as one of intrinsic value, and that it was advocated because it was likely to meet a large and increasing demand for life insurance by the industrial masses of that State. . As another illustration of the earnestness and ability with which the editor of the Insurance Times advocated the establish- ment of an Industrial insurance company in the United States, I quote from an article which appeared in the October issue of that journal for 1874, which brings out with much emphasis the reasons which influenced the editor to devote so much space and time to the advocacy of the new form of life insurance in this country : ' ' The worthiest members of this class [the working people] have been betrayed continually by the most specious inducements to invest their little spare cash in associations and companies promising the most alluring profits and advantages imaginable. Their promises have been broken, and those that trusted in them have consequently been subjected to cruel loss and privation." And after quoting in full that part of Mr. Clarke's report which dealt with Industrial insurance, and to which was thus given a much-needed amount of publicity not usually accorded to a pub- lic document, the article continued: " There is, therefore, a great need of its adaptation to the wants of the laboring classes, 54 HISTORY OF THE PRUDENTIAL. ' not by unreliable parties, but by those who would worthily com- mand the entire confidence of the people. * * * * To answer the purpose indicated, it is of no avail to introduce agencies of remote companies, however excellent, or to place the conduct of this business in the hands of persons not recognized by the pub- lic as leading men of the highest rank in the insurance world. * * * # The schemes already afloat and worked by men without repute, have only beclouded a fine opening, and rendered its prosecution more difficult by the disappointment and preju- dice which have been engendered by unsatisfactory experience. * * * * if the duty of supplying the need of life insurance to the industrial classes were undertaken by a superior under- writer, at the head of a great life institution, they would dissolve like wreaths of mist in the blaze of the summer sun." Thus, after years of agitation, Mr. English, as editor of the Insurance Times, had reached the conclusion that it no longer was merely desirable that the business of Industrial insurance should be undertaken by a responsible company, but in the above sentence he speaks of the ' ' duty of supplying the need of life insurance to the industrial masses, ' ' and he concludes with the hope that the ' ' suggestion of Commissioner Clarke, which almost assumes the form and urgency of an appeal, will meet a fitting response from some one of the master minds of the life under- writing fraternity." HOME OFFICE OF THE PRUDENTIAL FRIENDLY SOCIETY, 1875-1878. THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 55 CHAPTER V. THE PRUDENTIAL FRIENDLY SOCIETY, 1875. It is self-evident that the period of agitation and experiment had passed, and that the time for the foundation of an institution on the basis of the English Friendly Societies and the British Prudential had come with the new year, 1875. While Stephen English and others had pleaded and argued for the organization of an Industrial company, there were those who were strongly in favor of forming an institution more in harmony with the principles and practice of the Manchester Order of Unity and the Royal L,iver Friendly Society,* which combine a provision for aid in sickness with assurance for a sum sufficient 'for burial ex- penses in case of death. Many factors contributed to favor the latter form, not the least of which, if not the most important, must be considered the large amount of sickness prevailing in the large cities of the United States during the early seventies. As a rule the mortality was above 25 per 1,000 of population, often rising as high as 30 per 1,000 during a single year. The larger \ part of this excessive mortality was caused by zymotic diseases, and the disease prevalence was in general far in excess of that of the present time. What was generally true of most of the large cities of the East was true in particular of Newark, N. J., which at this time had a population of about 120,000, and held high rank as one of the most important manufacturing centres in the United States. The average death-rate of Newark for the period 1872-' 75 was 31 per 1,000 of population. Smallpox, typhoid fever, diphtheria, scarlet fever, and especially consumption were all excessively prevalent during this period. While the general mortality was high, the mortality at the younger ages was even more pro- nounced, the increase in the death-rate at ages under ten, for * This society no longer transacts a sickness insurance business. 56 HISTORY OF THE PRUDENTIAL. instance, having been largely in excess of the increase in the population. Taking into consideration the fact that Newark was almost exclusively a manufacturing city, with a large proportion of its population depending on weekly wages, it is quite clear, to any one who has at all studied the relation of an excessive mortality to social welfare, that it was here, as in England (in Liverpool, Birmingham and Manchester), that the demand for Industrial insurance should first manifest itself in a most emphatic form, and, as we shall point out more clearly later on, it was from the large employers of labor that the first direct assistance came in the formation of a society and later on of a company as a remedy for the ills resulting from social burdens beyond the strength of the average individual workman. It is much to be regretted that data are wanting as regards the actual amount of pauperism and poverty prevailing in Newark at this period, but, from census returns and other fragmentary data, it is evident that pauper funerals were exceedingly common in Newark during the early seventies. For New York City, where conditions were even worse than they were in Newark, actual data as to pauper funerals are available, showing that the rate of such funerals per 10,000 of population was 33.1 during 1 8 70-' 74, against an average rate of only 22.0 during the five years 1895-' 99. Hence, it is shown that not only were pauper funerals exceedingly common during the years preceding the establishment of Industrial insurance, but since that date a material reduction in number has taken place. Such conditions as have been pointed out are likely to prove an incentive for the development of plans tending towards im- provement by the application of insurance principles, which aim to do away with the necessity of a demand for public charity from an otherwise able and intelligent body of workingmen, making worthy efforts to solve life's problems in their own way and within the limits of their means. It was to Newark that Mr. John F. Dryden had come, in 1873, with the purpose of launching his new scheme of working- ^ men's insurance. Surely he could not have selected a more appropriate locality, a better city for a trial of his new ideas in life insurance and finance, and a more promising field for the first application of English principles of Industrial insurance to THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 57 American social and economic conditions. Time has proved that the selection of Newark was a most wise one ; time has proved that Mr. Dryden was right in his conception of the future possi- bilities of Industrial insurance on American soil. Mr. Dryden had for some years devoted much time and study to the question of life insurance for workingmen and their families, his attention to this branch of the business having been attracted by the report of Klizur Wright on the methods and condition of the British Prudential. On digesting these com- mentaries of Mr. Wright and Mr. Gladstone, Mr. Dryden did not take their conclusions for granted, but procured all the reports and data of the Knglish company and the British Friendly Socie- ties, and after a careful study of the facts concluded that Mr. Harben and the Knglish people were right, and that Mr. Wright and Mr. Gladstone were in error. Satisfied that the business was deserving of a trial, when modified to meet American social and economic conditions, Mr. Dryden first submitted his plans to some people in his native State (Maine), but no encouragement was given for a practical demonstration of his ideas. Not discouraged, he had come to Newark in 1873, and, after interesting a few people in the matter, had a bill passed by the Legislature, chartering The Widows' and Orphans' Benefit Society, but, as has been pointed out, nothing substantial came from this effort, an effort too much in harmony with the prevailing idea of providing workingmen' s insurance on the "Bund" or "Union" plan. After a brief experiment, it was found necessary to alter the original plans, and in the spring of 1875 tne charter of The Widows' and Orphans' Benefit Society was amended so that the name of the society was changed to that of The Prudential Friendly Society, which, in 1877, by another amendment became The Prudential Insurance Company of America. Among the incorporators of the society were many leading merchants and manufacturers, who, according to a sketch in the Newark Standard, ' ( had been daily called upon for subscriptions to bury the poor or furnish aid in sickness and distress." It was well for the new enterprise that men of exceptional ability and known integrity and experience should have been drawn into the formation of the new insurance project, since the frequent failures of so-called Aid Societies or Fraternal Societies, parading 58 HISTORY OF THE PRUDENTIAL. under the guise of high-sounding titles and often supported by names well known in the world of finance and commerce, had only too often fallen far short of their promises and shamefully betrayed a most sacred trust. It will be recalled in this connection, how earnestly and per- sistently the Insurance Times, in its frequent articles in favor of the organization of an Industrial insurance company, had insisted that ' ' It is all-important that whoever undertakes it should stand so high as to command the entire confidence of the people, and be able to gather about him a corps of coadjutors and subordi- nates who would work with him with intelligence, zeal and industry, incapable of despair, flagging or failure." It was, therefore, most fortunate for the cause of genuine workingmen's insurance that from the outset the new organiza- tion had the moral and material support of the very best com- mercial and financial element in the city of Newark. In a notice of the actual commencement of business operations by The Prudential Friendly Society, the Newark Evening Courier of November 13, 1875, referred to the managers of the society as follows : ' ' The gentlemen who have the management of this important and humane enterprise are too well known in Newark to require our endorsement. Their names are a synonym for financial strength and integrity, and our people know that funds entrusted to an organization which is under such control will be guarded with sacred care." The Newark Register of the same date referred to the society in the following words : ' ' One of the most gratifying facts connected with this society is its strength and security," and it " may be said to be founded upon a rock" a rather curious coincidence, considering the fact that the motto of the Company, "The Prudential has the strength of Gibraltar," became, in course of time, a household word. While the charter of the society had been supplemented on February 18, 1875, which must be considered the date on which Industrial insurance had its beginnings in the United States, it was not until November 10, 1875, that the actual business opera- tions commenced, and it was on this day that the first application was written on the life of the then cashier of the German Bank, Mr. W. R. Drake. The name of John F. Dryden, the first secretary of the society, appears as a witness to the application, which is reproduced in full on the opposite page. ATION. THE PRUDENTIAL FRIENDLY SOCIETY ,:EC 1ST. J". M;I> BY THK AWLICANT. i FIRST APPLICATION RECEIVED BY THE; PRUDENTIAL FRIENDLY SOCIETY, NOVEMBER IO, 1875. ^J/^ THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 59 Before taking account of the events following this actual commencement of business operations, it is necessary to consider briefly the general facts relating to the period which had elapsed from the time the charter of The Widows' and Orphans' Friendly Society had been amended on February i8th, to November icth, when the first application for membership in The Prudential Friendly Society was made. During the month of January, 1875, the discussion and public consideration of Mr. Wright's savings-bank plan contin- ued, and much attention was given to his many publications on the subject, especially his bitter attacks on regular level-premium life insurance. The Boston Board of Trade took the matter into consideration and proposed ' ' to inaugurate a new movement in life insurance," which, had it succeeded, it is not too much to say, would have made Industrial insurance unnecessary and im- possible. The Board of Trade unanimously approved the plan of Mr. Wright and recommended that the same should be tried on the ground that ' ' the people who most need life insurance can not well afford the luxury of the agency expenses of the present sys- tem." It will be observed that this was in direct opposition to Mr. Wright's earlier plea, that the agency system was indis- pensable to the extension of life-insurance principles to the masses. It had been further recognized by this time, in the words of the Monitor, that ' ' any man who knows anything about life-insur- ance companies understands perfectly well that soliciting agents are their motive power." While something was to be said in favor of Mr. Wright's scheme, the people at large, and especially those best informed in the science and practice of life insur- ance, were opposed to his project on the ground of its utter impracticability, and the opposition is best expressed in the words of a member of the Massachusetts L/egislature, who, in explana- tion of the reason why the Legislature had refused Mr. Wright a charter for his proposed company, said that " Mr. Wright's plan /\ Jfa was looked upon as impracticable, very ingeniously contrived, but wholly without motive power," since, as has been stated, it was proposed to employ no agents to acquaint the public with the merits of the scheme by a direct canvass, such as is made by Ordinary and Industrial companies. While this discussion was engaging the attention of the people in the Kastern United States, an effort was made in Hamilton, 60 HISTORY OF THE PRUDENTIAL. in the province of Ontario, Canada, to organize an Industrial company on the plan of the British Prudential, by the name of The Industrial and Commercial L,ife Insurance Company, but, as far as I have been able to learn, practically nothing was accomplished, and no actual business was ever transacted. This fact is of interest merely as an indication of the growing demand for Industrial insurance in all parts of the country. The great English company continued to attract attention on this side of the Atlantic, and its success as recorded in the insurance journals must have offered tempting inducements to American insurance managers to try the same experiment. The report of the British company for the year 1874 had stated that there had been issued during that year the almost incompre- hensible number of 888,758 Industrial policies, against 646,377 policies issued during 1873. The returns of the company were extensively commented upon, and led the Insurance World (1875, p. 82) to remark that the system of Industrial insurance is yet ' ' in its chrysalis state in this country, ' ' which was strictly true, for Mr. Dryden and his associates were working almost day and night to perfect the organization of a society which in time was to prove the first successful Industrial insurance company of Ameri- can origin to be operated on the plan of the British Prudential. As has been stated, Mr. Dryden had had the subject of Industrial insurance under consideration for some years, and had not only made himself familiar with the leading principles and features of the system of the British Prudential, but he had also carefully considered and studied the plans of the English Friendly Societies, and in particular the Manchester Order of Unity, and the Trading Societies, like the Royal Liver, of Liverpool, the latter of which made a specialty of burial insurance for all the members of a family. With the object of developing in the United States a new form of workingmen's insurance, which would com- bine all the virtues of the old plans, while eliminating, as far as possible, the weak points, which had been the cause of so many disastrous failures, Mr. Dryden secured all the available informa- tion from England, entering at the same time into correspondence with Neison and Ratcliffe, the highest authorities on Friendly Society practice of this period. The one broad fact which remained with Mr. Dryden as the result of his study and investigation must have been the THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 6l - conclusion pre-eminent in the minds of all English students of the subject of Friendly Society practice and finance, namely, that an actuarial basis was the first requisite to make possible the /( success of an undertaking of this kind, and with this thought in I mind, Mr. Dry den entered into communication with Mr. John E. * Clark, Professor of Mathematics at Yale College, who seems to have made himself thoroughly familiar with the actuarial and financial basis of life contingencies. From letters of Mr. Clark addressed to Mr. Dryden, during the months preceding the actual commencement of business opera- tions, I make a few extracts, as likely to prove of more than passing interest and importance to the student of Industrial insurance history. In his first letter to Mr. Dryden, dated March 26, 1875, Mr. Clark referred to the dearth of information on the subject of insur- ance, and especially on sickness and mortality, in the possession of Yale College, and intimates that his knowledge of the subject has been practically confined to a study of Neison's work on Vital Statistics. Influenced, no doubt, by the investigations of Neison, the great value of which is recognized even at the present time, Mr. Clark seems to have devoted considerable atten- tion to the question of the possibility of successfully transacting a sickness insurance business, and in a letter dated April 26th, he reported to Mr. Dryden that in consequence of his preliminary investigations he could safely recommend the adoption of a plan for the transaction of a sickness, burial and pension scheme, and that, "with strict attention to well-established principles and to^ detail of administration, it can, in my opinion, be transacted / $/ safely, and, if the demand for it be good, with a fair return to the stockholders." He, however, recognized the inadequacy of the data at his command, and in reference to sickness benefits stated that, ' ' by going into operation cautiously upon the basis of this experience, you will be able to gather in your office an experience of your own, which will, after a time, furnish such checks and modifications as may be desirable, ' ' and in still another letter, dated April 3oth, Mr. Clark repeated his words of caution in reference to the sickness branch of the business, stating that ' ' this branch of the business should be particularly studied. ' ' Sub- sequent experience proved for this country, as it had been true for England, that a sickness benefit business can not be 62 HISTORY OF THE PRUDENTIAL. safely transacted by an insurance company. It is absolutely im- possible to guard against sham sickness, imposition and fraud in other directions, and all calculations, on no matter how ac- curate a basis, will prove inadequate in practice. In conse- quence, a few years later, The Prudential Insurance Company discontinued the transaction of sickness insurance, after this branch of the business had been given a sufficiently extensive trial to prove that it could not be safely and profitably transacted, and that the demand for this form- of insurance protection was fmuch less than had been anticipated, increasing preference being given to life insurance for burial or investment purposes. Another point receiving considerable attention before the actual business operations had commenced, was the probable and proper expense-rate of a life-insurance business to be transacted on the weekly- or monthly-payment plan, and, while this question in a manner demanded considerable actuarial consideration and treat- ment, it was still very largely a practical one, demanding the taking into account of the conditions under which the business had to be carried on, namely, by a house-to-house canvass, and the subsequent collection of weekly premiums from the houses of the insured. Mr. Dryden from the outset insisted upon a load- ing of the premiums sufficient for the safe transaction of the busi- ness, holding to the belief that ' ' it would be very easy to make an equitable return to the policy-holder if an overcharge had been made, ' ' and he further especially insisted upon safety and permanency, rather than yield upon a point which might have brought more rapid success during the first few years, but have imperiled the future existence of the society ; and in these views, Mr. Dryden was fully sustained by Mr. Clark, who, after a lengthy discussion, conceded that " I shall proceed to carry out your views cheerfully, and the latter, I am sure, do not appear to me in any sense unreasonable from your point of view ' ' ; and in closing his letter of June i6th, Mr. Clark added that " in any case of doubt in such matters action should, of course, keep w r ell on the side of safety, and this maxim I have constantly considered in my recent calculations. ' ' In a letter dated June 4th, Mr. Clark makes reference to Mr. Dryden 's careful selection of men of ability and prominence as directors and stockholders in the new enterprise, a matter of the greatest possible importance, and one of the formative influences THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 63 making for the future success of the company. Mention has already been made of the fact that among the incorporators of the society were men of wealth and influence, merchants and manu- facturers of the city of Newark, and Mr. Clark incidentally refers to the matter in stating that ' ' yo'ur plan for reaching the different industries through the selection of your directors seems a good one, and you do not seem to be unwise in not hastening too much the completion of your Board. ' ' Anxious as Mr. Dry den must have been to commence active operations, he, nevertheless, with a characteristic spirit of patience and conservatism, refrained from making haste at the most critical period of the history of the society, which was to be the future Prudential Insurance Company of America. It is thus apparent that every step taken by Mr. Dryden had been carefully considered, and it was not until July that Mr. Clark was able to forward the completed calculation of rates for the sickness and annuity branch of the business, and on July loth the life-rates for the burial branch. In transmitting his sickness calculations he once more emphasized the importance of dealing cautiously with this part of the business, and at the same time pointed out most of the observed dangers pertaining to this form of insurance as carried on by the Friendly Societies in England. Mr. Clark carefully went over the whole ground, so ably discussed by Finlaison, Neison and others, and concluded his recommenda- tions with the advice that ' ' an actuarial valuation of each branch v of the business should be made, if possible, once per annum, and that the first of these valuations should be made at least within, V a year after the business had well gotten under way. ' ' To this advice, which is clearly indicative of a thorough comprehension on the part of Mr. Clark of the difficulties incident to the suc- cessful transaction of an Industrial insurance business, he added the further advice, which deserves to be remembered as the very foundation of the massive and colossal structure of present-day Industrial insurance, and for the disregard of which so many thousands of so-called fraternal or co-operative schemes have come to an untimely end: "Meanwhile, as at all times, your directors should be impressed with the importance of keeping sacredly the proper reserve on all your policies, so that if your business is successful, as I most sincerely hope it may be, you may secure constantly increasing confidence; and if in the worst 64 HISTORY OF THE PRUDENTIAL. event it should chance to be at all unsuccessful, it may at least not end in dishonor. ' ' Such were the foundation principles on which Industrial insurance in the United States was established by The Prudential, which in a brief quarter of a century became known to every one, old and young, as " the Company which has the strength of Gibraltar. ' ' Another evidence of the painstaking efforts of Mr. Dryden, in giving consideration to every possible theoretical or practical aspect of the problem of workingmen's insurance, is found in a letter of Mr. Clark, dated August 24, 1875. Mr. Dryden seems to have called Mr. Clark's attention to an article in the New York Tribune on ' ' L,ife Insurance for Workingmen, ' ' which may pos- sibly have been suggested by an address of Blizur Wright on ' ' Life Insurance for the Poor, ' ' delivered at the annual meeting of the National Social Science Association at Detroit, Mich., on May 13, 1875. In the Tribune article a strong argument had been made for life insurance for the masses, and I can not but think it of value to give a few extracts from a now inaccessible plea for workingmen's insurance on the Industrial plan in the United States. The Tribune had said as follows : ' ' The policies that work- men take at best are small, and the payments of premiums are divided as much as possible ; hence the shop and the factory offer an unprofitable ground to the canvassers [for Ordinary insurance] , who get a commission on paid premiums only, consequently life insurance is not brought home to the workingman by personal effort, as it is to other classes in this country. This, then, is the difficulty to be surmounted. That it is not impossible is shown by the enormous business of an English company [the Pruden- tial] which makes workingmen's policies a specialty. In Great Britain the insurance companies have found out how to insure the workingman ; our companies have not. In these times, while the business of life insurance is dull, and agents find it hard work to earn a living, it might be worth while to study the system adopted abroad. Insurance for workingmen in this country offers an opening into fresh fields and pastures. ' ' In his remarks at the Detroit meeting of the Social Science Association, Mr. Wright had discussed the subject from an en- tirely different standpoint, expressing the belief that, by means of his family bank, it was possible to introduce ' ' self -solicited ' ' THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 65 life insurance for the industrial masses of the United States. As has previously been pointed out, his efforts in this direction proved a complete failure, and such companies, especially the Provident Savings Assurance Society, as adopted his suggestion to trans- act business without agents, were soon compelled to abandon the plan and revert to the universal method of soliciting insurance by direct personal canvass, the necessity of which had been pointed out as early as 1853 by Tuckett in his insurance journal, to which previous reference has been made. However, there was one remark of Mr. Wright which deserves to be placed on record, and that is, his opinion that, ' ' to adapt life insurance to the poor, it should be reduced to the utmost simplicity, so as to be within the comprehension of the humblest capacity. ' ' It may safely be said for Industrial insurance that it fully and completely came up to this demand, and to this fact it owes no small amount of the success which has since been attained. As an indication of the small extent to which life insurance had been made accessible to the masses, it may be pointed out that, according to a report made in 1875 by the Massachusetts Bureau of L,abor Statistics, * out of 397 workingmen's families which made returns of their expenditures, only a single working- man's family paid an annual premium of $18 for insurance purposes. While practically nothing was expended for life insurance, a disproportionate part of the income was expended for charities and societies, and it is not too much to say that by 1875, workingmen's insurance was practically limited to secret organizations or co-operative benefit societies, most of which, at best, provide only temporary insurance for a small number, who receive benefits during the existence of the organization, an ex- istence which is usually limited to a generation as its maximum period of possible usefulness. In marked contrast to the investigations in Massachusetts in 1875, the investigations made by the Aldrich Senate Finance Committee on * ' Retail Prices and Wages, ' ' and also by the Michigan and Indiana State Bureaus of L,abor, prove that, at the present time, life insurance forms a very considerable element in the expense-rate of workingmen's families, and this result, it may with confidence be asserted, must be attributed largely to the * Mass. Labor Report, 1875, p. 435. 66 HISTORY OF THE PRUDENTIAL. missionary work carried on by Industrial insurance companies in behalf, not only of Industrial insurance, but also of other forms of insurance, savings and thrift ; and it may not be out of place in this connection to state that in 1875, although there were then in the State of Massachusetts some 720,639 of savings-banks depositors, with an average deposit of $330, it was officially pointed out by the Labor Commission of that State that ' ' the fact remains that the English Government aids fewer paupers in proportion to population than our own." * Attention may here properly be called to a point of more than passing importance, in view of present-day attacks on Industrial insurance as a method by which the poor are encour- aged to expend extravagant sums for funeral purposes. While the charge in itself is so absurd that it hardly needs refuta- tion, in view of the self-evident fact that the amounts realized are, as a rule, hardly sufficient to meet the funeral expenses and the cost of the last illness, it may be of interest to call attention to an article in the September number of the Insurance Times for 1875, in which the question of funeral expenses and funeral pomp was discussed and from which I make the following extract : "It is impossible to pay a visit to any of our cemeteries when funerals are going on, without experiencing not only a kind of shudder at the whole paraphernalia of the undertaking business, but also a feeling of pious grief at the thought of the silly trammels of cus- tom, in which all classes of society are bound, in the matter of funeral pomp ; and the wanton extravagance which sets up in admired disorder, full of endless repetitions, monumental effigies, and thousands of silly sentiments embodied in stone and marble, some of which are, even like the inverted torch, purely heathen." This article is of exceptional interest in view of latter- day discussions in which the charge has been made that the vast extension of Industrial insurance has been responsible for the asserted increase in funeral pomp and funeral expenditure. It will be observed that before a single Industrial policy had been written funeral expenditures were sufficiently extravagant to call for public condemnation, and that it is therefore shown that public opposition to funeral extravagance antedates the estab- lishment of Industrial insurance in the United States. * Mass. Labor Report, 1875, p. 211. THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 67 By October, 1875, three-quarters of the year had passed, and, as far as the public knew, no definite steps had been taken to establish an Industrial insurance company in the United States. There is, however, record of an attempt made in Washington, D. C. , during the early part of the year, when an effort seems to have been made to establish an Industrial insurance company, but like the Industrial and Commercial, of Hamilton, Ontario, noth- ing substantial seems to have been the result, and there is no proof that the proposed company ever actually transacted business. The Insurance Times, with a persistency fully worthy of the cause, continued its pleadings in favor of such an undertaking, and in the October number for 1875 appeared another excellent article, under the title " L,ife Insurance for Those Who Need It Most, ' ' from which I quote a few passages : ' ' Who need life insur- ance most ? The poor, or the rich ? The families who are entirely dependent upon the daily or weekly earnings of their head, or those who have other sources of maintenance ? L,ife insurance is good for the rich and the 'well-to-do,' but it should be looked upon as indispensable to the poor. The complaint is general, however, that life insurance fails to reach those who most need it, and upon whom it is calculated to confer the greatest benefit. The family of the poor man, that ought to be protected by life j insurance, is seldom or never shielded by a life policy." Referring to the efforts that had been made to transact an insurance business by means of ' ' Bunds ' ' or similar organiza- tions, the Insurance Times stated that "Some abortive efforts have been made in this direction, but, as we predicted from the first, they failed and came to nothing, because they were not made by persons of the right quality and calibre. We regret, for this reason, to see men unequal to the task undertake it ; and to see others, whose talents, standing and influence fit them for the work, waste their powers in attempting the achievement of impos- sibilities. *#**! such gifted and eminent actuaries as Klizur Wright, Sheppard Homans, and some few other leading life insurance minds, would employ their great knowledge, trained ability and wide influence, to promote the extension of life insur- ance to the hard-working and industrial classes, instead of devot- ing their talents and labor to the development and introduction of pet theories, however ingenious and attractive, they would render 68 HISTORY OF THE PRUDENTIAL. humanity a great and lasting service, in the blessings of which millions would be partakers for ages to come. ' ' The regular, rapid and solid growth of a system of indus- trial insurance, or life insurance for the poor, would have an almost unlimited scope and usefulness, and the prospect it presents ought to kindle in great and benevolent minds a noble ambition to promote its spread and establishment. We x have no desire to insist upon a servile adherence to the system ^ . of the Prudential of England, which has achieved so much suc- cess in this field of insurance, but its plans are certainly deserv- ing of careful study, and its prosperous example is full of inspiriting encouragement. It insures the life of even the day laborer, and collects of him a weekly premium of a penny. * * * * it is found that industrial insurance is in every way, directly and indirectly, a benefit to the poorer classes. It helps to train them to habits of saving and foresight, and illus- trates, in the most practical manner, the advantages of making a provision for the future. ' ' These few extracts from a most excellent article will suffice to indicate the increasing knowledge and comprehension of the principles of Industrial insurance, and it would seem that by October, 1875, the commencement of actual business operations could no longer be postponed. But the year 1875, about the middle of the financial depression, extending from 1873 to 1878, was not one in which it was an easy matter to organize a financial enterprise on a solvent and substantial basis ; and while the outlook for a successful undertaking in the domain of life insurance was very promising, it was nevertheless a most serious matter to overcome local difficulties and to secure the necessary finan- cial support, and I may recall the remarks in the Insurance Times (October, 1875), to the effect that for such an undertaking it re- quired a man and a mind that ' ' should stand so high as to com- mand the entire confidence of the people, and be able to gather around him a corps of coadjutors and subordinates who would work with him with intelligence, zeal and industry, incapable of despair, flagging or failure. " It is something very considerably to the credit of Mr. Dryden that at this trying time he was able to meet this requirement in the selection of a Board of Directors and a "corps of coadjutors and subordinates," many of whom are still connected as executive officers with The Prudential Insurance THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 69 Company at the present time. It is impossible in a work of this kind to do justice to the great services which were rendered Mr. Dryden by his early associates at this critical period of Prudential history, but brief mention must be made of the invaluable assist- ance rendered the cause of Industrial insurance by Dr. Leslie D. Ward and Mr. Noah F. Blanchard. It was largely in consequence of Dr. Ward's untiring efforts that a strong Board of Directors was secured for the Society and that the necessary financial support was obtained from men whose commercial standing in the com- munity was second to none. Dr. Ward was at the time a prac- ticing physician with a large private practice, in which he had obtained an insight into the life of the people and had become familiar with their most urgent wants. In a similar manner Mr. Blanchard, as a large manufacturer and employer of labor, had learned by personal experience of the existing need of some institution likely to accomplish the purpose for which The Pru- dential had been designed. Mr. Blanchard became actively inter- ested in the affairs of the Society and incorporated into its business operations the same principles which had been the cause of his earlier successes in other commercial enterprises, and in the logic of events he succeeded to the Presidency in 1879, which position he held until his death in 1881. Dr. Leslie D. Ward was elected Vice-President in 1 884, which position he holds at the present time. All discouragements and difficulties notwithstanding, The Prudential Friendly Society by November 6, 1875, was at last in a position to commence business, and it is but proper that I should here give in full the directorate of the Society, as I find it stated in the Newark Daily Advertiser of November i8th : NEWARK DAILY ADVERTISER. THURSDAY EVENING, NOVEMBER 18, 1875. The Prudential Friendly Society, 812 Broad Street, Newark. (State Bank Building.) DIRECTORS. Horace Ailing, James M. Durand, George Richards, Benjamin Atha, Isaac Gas ton, William Robotham, Allen L. Bassett, Albert O. Headley, Chas. W. A. Roemer, Noah F. Blanchard, Andrew Hopper, Edgar B. Ward, Chas. G. Campbell, Henry J. Yates, Leslie D. Ward, Aaron Carter, Jr., Alfred Lister, Marcus L. Ward, Jr., William R. Drake, George D. G. Moore, William Whitty, John F. Dryden, Wm. H. Murphy, EHas A. Wilkinson. . BASSETT, , President. JOHN F. DRYDEN, Secretary. 7O HISTORY OF THE PRUDENTIAL. It will be observed that Mr. Dryden had been made the Secre- tary of the Society, while Mr. Bassett had been elected President. Although Mr. Bassett had been somewhat interested in insurance problems and had been connected with the earlier effort of the Widows' and Orphans' Friendly Society, he had not in any man- ner contributed directly to the organization of the new Society ; all of the original work, especially the correspondence with Mr. Clark, had been carried on by Mr. Dryden, who, as a matter of course, had to associate with himself men of capital and ability to carry on so difficult an enterprise as a new insurance organiza- tion on a substantial basis in the middle of the financial depression of 1 873-' 78. During the few years of his administration Mr. Bassett failed to give satisfaction to the Directors, and in May, 1879, resigned. He was succeeded by Mr. Noah F. Blanchard, a man of exceptional administrative ability, at whose death, in May, 1 88 1, Mr. John F. Dryden was unanimously elected President, which position he still occupies. For the purpose of acquainting the public with the special features of the new plan of insurance, a prospectus of the Society had been issued, which contained many features which were novel and attractive, while, at the same time, the plan was set forth in a plain and straightforward manner, so much so that the enterprise at once attracted considerable public attention, giving rise to many editorial discussions in the public prints. The following are the most important features referred to at length in the prospectus : The Prudential Friendly Society offered insurance against sickness and death, as well as a provision for support in old age for persons of either sex from infancy to old age. The Society required no medical examination and promised to pay all claims immediately after the filing of proper proofs of death or sickness. Contributions were principally to be made on the weekly- payment plan, but many of the benefits of the Society could also be obtained upon the monthly, quarterly, or semi-annual payment plan, according to the tables of the Society. As a check upon imposition and fraud it was set forth in the prospectus that * ' A member will not be entitled to recover from the Society on account of sickness or death happening before three months' membership, or in case of sickness, except from the day on which the Society is notified. ' ' THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 71 The amounts for which insurance could be made were limited to $25 a week in case of sickness, and to $500 in case of death. The following is an abbreviation of the first adult rate table used by the Society : FIRST ADULT RATE TABLE USED BY THE PRUDENTIAL FRIENDLY SOCIETY. AMOUNTS PAYABLE AT DEATH FOR A WEEKLY PREMIUM OF AGE NEXT BIRTHDAY. 5 CENTS. 10 CENTS. 15 CENTS. 20 CENTS. 25 CENTS. II to 15 $IOO OO 16 to 20 125 oo $250 oo 25 no oo 220 oo $330 oo $440 oo 3 94 oo 188 oo 283 oo 378 oo $472 oo 35 80 oo 1 60 oo 240 oo 320 oo 400 oo 40 66 oo 132 oo 200 00 267 oo 334 oo 45 54 oo 108 oo 164 oo 219 oo 274 oo 50 88 oo 133 oo 177 oo 221 00 55 . . . . 70 oo 105 oo 140 oo 175 oo 60 . . . . 54 oo 81 oo 109 oo 136 oo 65 .... 62 oo 82 oo 104 oo 7O 62 oo 78 oo /** 7cr ^7 OO JO O/ " No benefit will be payable until certificate has been in force three months. Contributions payable during life. Benefits payable only at death. To the preceding table must be added the following extract from the prospectus explaining the methods of payment and objects to be realized : ' * The Society will use the utmost promptness consistent with safety in the payment of claims. In the event of sickness, benefits will be paid from week to week while sickness lasts. In event of old age, benefits will be paid on a fixed day of each month. In event of death, benefits will be paid immediately after proper proofs are filed with the Society, in order that the money may be available at once for funeral expenses. ' ' As has been stated, the Society from the start made the bene- fits of life insurance accessible to persons of all ages> a special infantile table having been constructed, of which the following is an abbreviated copy, and to which I have added such extracts as 72 HISTORY OF THE PRUDENTIAL. are contained in the original prospectus. It will be observed that the lowest premium accepted was three cents, and the table there- fore is based on this minimum premium : FOR THREE CENTS A WEEK, TWELVE CENTS A MONTH, THIRTY-FIVE CENTS A QUARTER, SIXTY-FIVE CENTS SEMI-ANNUALLY, OR ONE DOLLAR AND TWENTY-FIVE CENTS ANNUALLY, THE PRUDENTIAL AT THE DEATH OF A CHILD AS FOLLOWS : AGE OF CHILD AMOUNTS PAYABLE AFTER MEMBERSHIP.* THREE MONTHS. ONE YEAR. I $10 00 $12 50 2 10 00 12 50 3 10 00 15 oo 4 12 50 17 50 i 15 oo 17 50 20 00 25 oo 7 20 oo 30 oo 8 25 oo 40 oo 9 30 oo 50 oo If the child should die within three months from date of admission to membership, no Benefit will be payable. This table was so arranged that the insurance increased from year to year with increasing age, while the premium remained the same, this being necessary in view of the well-known fact that the rate of mortality is highest at birth, gradually declines until about ages twelve to thirteen, and after that constantly increases to the highest attainable age. Thus it will be observed that the principles of actuarial science were made applicable to the most complicated part of the business. The aims and objects of the Society are fully set forth in that part of the prospectus which dealt with the ' ' Plan of the Prudential, ' ' where it is stated that ' ' It is the special aim of this * It was at first the practice to consider the age last birthday as the age at entry, hence age one is included in this table. Under the present prac- tice of considering the age next birthday age two is the first to find a place in the infantile table. It has never been the policy of the company to accept risks at ages below one for reasons which have been discussed in other parts of this work. THE; PRUDENTIAL FRIENDLY SOCIETY, 1875. 73 Society to enable people of small means to provide themselves with relief in sickness or accident ; second, for a pension in old age ; third, for an adult burial fund ; fourth, for an infant burial fund. The contributions charged for the above-named bene- fits have been computed by eminent actuaries of America and England, and are such as careful study and close calculation have shown to be equitable and necessary. They are as low as the Society can afford, for the benefits granted, and are high enough to make it safe. ' ' Of the above-named four distinct branches, the first, as has been stated, was discontinued after a few years of actual expe- rience, as had been the case with the English companies attempt- ing to transact a sickness insurance scheme on a large scale. The second failed to meet with public favor on account of the inherent difficulty of obtaining so desirable an object as independ- ence in old age by the payment of the small sums which the working people of the period could afford to devote to the accumulation of a fund sufficient to yield a substantial annuity in old age. The third and fourth branches became in time the all- important parts of the business, experience having demonstrated that the demand for a sum payable at death was greater than the demand for other insurance features, however desirable in them- selves. The Prudential Friendly Society was thus plainly what it \ y was designed to be, an Industrial insurance company on the plan \ of the British Prudential, with such modifications and slight changes as seemed desirable at the time to make the plan attract- ive to the American working people. In the prospectus it had been clearly stated that * ' The Prudential is designed for persons of limited means, ' ' and that * 'Its benefits may be secured by cutting off some luxury which can be dispensed with without injury to health or happiness. ' ' It was never the plea of Industrial insur- ance companies that they were soliciting the risks of paupers or the lowest poor, but from the start they made an effort to reach the industrial masses if it be so, the industrious poor ; but in their efforts to obtain business, in their efforts to insure as large a proportion of the population as possible, they never failed to keep in mind the early principle of the Prudential, that ' ' The benefits of Industrial insurance may be secured by cutting off some luxury which can be dispensed with without 74 HISTORY OF THE PRUDENTIAL. injury to health or happiness," and, I may add, without detri- ment to habits of thrift in other directions than insurance. For even at this time, before a single application had been accepted, it had been recognized by Mr. Dryden, and was so stated in the first prospectus, that " A membership in the Prudential will induce prudence and economy, and become the foundation of good habits," as "It may be the means of saving an individual or family from a fate worse than death." In these after-years, when so much has been said and written on the question of the possible evil effect of this system of insurance on the morals and manners and material welfare of the people, it is well to recall these simple straightforward statements, which were thus incor- porated into the foundations of Industrial insurance in America, and which are to-day its strongest claim to public favor, as they have for twenty-five years been the strongest inducement to the industrial masses to keep the millions of policies in force on the books of the Industrial companies. Having pointed out the grounds on which the Prudential Friendly Society from the very beginning rested its case, it may not be out of place to refer at some length to the public approval of the introduction of Industrial insurance in the city of Newark in 1875. Among others the Newark Daily Advertiser, one of the oldest newspapers in the northern part of the State, referred to the new plan of the Prudential as follows : A new feature in insurance has just been introduced in this city, known as the Prudential Friendly Society, directed and officered by gentle- men of the highest character. Its business location is in the State Bank building, and as it is the first move in this direction made in this country, its working should be explained. The plan is that a certain weekly or monthly stipend paid to the Company shall secure a certain return in case of sickness, a provision for funeral expenses in case of death and in other cases a pension after a cer- tain age. This latter phase is not new, except as it is attainable by persons of small means who are " Prudential " enough to make and invest small savings at frequent intervals. The Prudential Friendly Society of Newark provides the applicant for membership with a blank on which are printed certain questions, which are answered and signed by the applicant and then referred to the Board of Directors. No medical examination is required, and the application is approved or rejected as the Board may decide. If accepted, something like a pass-book is issued to the new member, in which is printed the agreement between him and the Society, and in which the account between the two is written up at every payment. THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 75 In so far it does not differ much from many other forms of benefit or burial societies employed by the working classes of England. But the Prudential Friendly Societies go further and more wisely. They place no restriction on account of age, sex or occupation. All share alike from one year of age to the oldest limit of our race, except as to the rate charges, which vary with the age. By tables prepared from a very wide experience in England, and investigations scientifically conducted, the societies have ascertained the actual experience of two millions of lives* in England, Wales and Scotland, as regards sickness, old age and death. These investigations show the experience on males and females separately, the effect of life in cities, towns and rural neighborhoods and of different trades and occupations, from the worker in the mine to the mechanic in the shop, the seamstress at her work, the clerk in the store and all the various avocations and professions. They also show the average amount of sickness of each particular year of life from infancy to old age. It is a fact brought out by these researches that the risk increases with the age of the member, that youth resists the assaults of disease and more easily throws it off, while older age succumbs more readily to either sickness or death. The practice of many benevolent societies has been directly the opposite of this, and so either the young person pays too much or the old too little. In fact it is the theory of some of them that the young should shelter the old. It may be very generous, but it is not business. These data reached, and they have been carefully reached by a long experience, the general average of the chance of having to pay for a sick- ness, an accident, a burial or a pension can be fixed, although the individual cases will occasionally confound the statistics and the member takes out vastly more than he puts in. For the sick relief no greater amount is granted than $25 per week, and for the burial fund $500 is the limit. When a loss accrues it is instantly payable. The terms of the agreement are so simple that questions of fraud are not likely to arise, and the presentation of the evidence is all that is needed to secure the payment. The whole subject is worthy of study. We have given only a meagre outline of its- general features and are not altogether informed as to all its merits or demerits. But we know that it has succeeded in England, and our rank as a manufacturing town, the close likeness of our industrial classes to those of the best class of English mechanics, induces us to suppose that the plan may work a great beneficence. In a similar manner the Society received the endorsement of other leading newspapers of Newark, and, as an indication of the careful consideration given to the subject, I quote the following extract from the Newark Evening Courier of November 13, 1875 : We have examined with considerable interest and satisfaction the prospectus of a new institution in our city called The Prudential Friendly Society, and which is located in the State Bank building, 812 Broad street. This Society has for its object to provide aid to its members whether male 76 HISTORY OF THE PRUDENTIAL. or female in event of sickness, old age and death. * * * * The contract between the Society and the member is very plain, and there seems very little chance for misunderstanding. It is " so much benefit for so much money." One of the foundation-stones of the system which the Prudential has intro- duced here is equity. Members are charged a contribution according to age, and the rates are so adjusted that each age contributes to the funds of the Society just in proportion as that age contributes to the risk. Experience has shown that at age twenty a person may be expected to be sick a little over eight-tenths of one week, while at sixty a person will upon the average be sick a little over four weeks in a year. Now it would be mani- festly unjust to charge two persons of the two different ages named, the same amount of contribution for an equal benefit, when one contributes five times as much to the risk of the Society as the other. The Prudential has kept this fact in view in making up rates, and has adopted the plan of charging contributions according to the age at the time a member enters the Society. In fact the whole plan of the Society rests upon a scientific basis, a basis which has been ascertained and approved by the highest actuarial ability in this country and England. In a city like Newark, whose population is largely made up of working men and women, the Prudential ought to find a large and successful field of operation. // seems to us that this organization is calculated to accom- plish a work of great beneficence wherever are to be found poor families in which the expense of sickness or death, or the infirmities of old age would cause discomfort or distress. It certainly will be a great boon if people of limited income can, by payments so small as not to cause inconvenience, provide a fund sufficient to pay the expense of a decent funeral, or which shall relieve the suffering and sorrow of the sick chamber. And as a further indication of the approval on the part of the press, I quote an extract from the Newark Register of November 13, 1875, in which the subject of Industrial insurance is also discussed at length from the standpoint of public policy : It is often said that there is nothing new under the sun ; but the plan of insurance put forth by the Prudential Friendly Society, an institution just organized in this city under the auspices of some of our very best and most responsible citizens, is certainly a novelty in this country. A feature of the Prudential system is the certificate issued guarantee- ing payment of a burial fund only, and may be obtained at all ages from the child one year old to the old man or woman who has reached the ripe old age of seventy-five. Every pains seems to have been taken by the projectors of this institu- tion to adapt it to the requirements of people in moderate circumstances. Hence, in event of sickness or accident, the society pays losses promptly from week to week while sickness lasts, that the money may be had and used when it will be of the greatest value ; and in old age the pension will THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 77 be paid upon a fixed day of each month with as much regularity and cer- tainty as a pension by the Government. When death occurs the burial fund will be paid immediately after the proper evidence of the loss is filed in the office of the society, and thus it becomes available for funeral expenses, at a time which to most people of slender income is one of the greatest extremity. The terms of payment required are also of the most advantageous kind. It would be worse than vain to offer poor people protection against the adversities of life and death, if the terms were such as to put it practi- cally beyond their reach. But what prudent, right-minded working man or woman can not and will not lay by a few cents each week or month to provide for his or her own future comfort, or the comfort of those whom it is a right and duty to protect? It is with great wisdom, it seems to us, that the Prudential has with so much care studied the necessities of the industrial classes. It makes the society in reality what it is designed to be,, an institution for all. One of the most gratifying facts connected with this society is its strength and security. It is not too much to say that no institution in Newark a city justly proud of its strong moneyed corporations has a Board of Directors that can more strongly claim the confidence of our people. The gentlemen are unexceptionable as to ability, wealth and character. In this there is a guarantee that the affairs of the Prudential will be honestly and ably managed. The system upon which the society transacts its business has received a long, patient and thorough investigation. It is about three years since an examination into the experience of similar societies in England was first begun with a view to establishing a society here, and although this has been quietly carried on, the investigation has been the most searching and thorough. The statistics upon which the rates are based are derived from the experience of a large number of societies and extend over many years, and are made by some of the oldest actuaries in London. As a matter of still greater precaution these have been again examined and tested by the Actuary of the society, Professor John E. Clark, of the Sheffield Scientific School of Yale College. These rates are founded upon the well-established fact that the risk increases with the increase in age, and that it therefore costs less to insure a young person than it does an old one. Each particular age is charged according to the risk he or she brings into the society on joining it. The society may be said to be founded upon a rock. In a city like Newark, embracing so many working men and women, the Prudential ought to do a large business. In fact, we can not see how this class of people can afford to do without its protection. In these newspaper articles there is so clear a recognition of the value, importance and necessity of such an institution as the Prudential, that I can not but think that, but for a recognized and actually existing necessity, it would have been impossible for 78 HISTORY OF THE PRUDENTIAL. the Society to have been ushered into existence by critics as friendly as they were honest, conservative and wise. While the new undertaking received so warm a welcome in the city of its birth, but little knowledge of the organization of the Society seems to have extended beyond the local boundary , and only fragmentary references occur in the insurance journals during the latter part of 1875. The Insurance Monitor in its November number referred to the Prudential, making at the same time reference to a similar attempt to organize an Industrial insurance company in Washington, D. C. As has previously been stated, The Industrial Life Insurance Company of Wash- ington never entered the stage of actual operations, and I confine my quotation to the reference made to the Prudential Friendly Society : The Newark enterprise is known as the Prudential Friendly Society, modeled after the English associations of the same name, with an effort, so far as we have learned, to profit from the experience of the best among them the Manchester Unity and the Foresters. Here again a word of caution may not be amiss. Until the subject was brought to the attention of Parliament some few years since, a large proportion of these organizations were, through ignorance or recklessness, sadly mismanaged, and numbers of them were in a bankrupt condition, while others were rapidly drifting into the same state. This condition of things was brought about by the same error which characterizes the co-operative schemes in this country a total disregard of the influence of age on the cost of insurance. And we would remind those in charge of this young enterprise that whatever the form of organization or nature of the benefit, age, as an element of the risk, can not be disregarded without almost certain failure in the end. The early experience of a friendly society is peculiarly deceptive. Only the probing of a skilled actuary can discern the insidious elements of future evils existing under the deceptive strength of a friendly society for years before the final crash. The manufacturing importance of Newark, approaching so nearly the condition of English cities, gives a strong encouragement to those interested in the success of this new enterprise. I have been compelled, for want of space, to limit myself to meagre abstracts from the public press of the period, for the purpose of illustrating the distinct local demand for such an in- stitution as the Prudential, and the universal and intelligent local recognition of the value of Industrial insurance from the stand- point of public policy. Had space permitted, I could have added THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 79 materially to this proof in support of the assertion that Industrial insurance in this country has been founded in consequence of a social demand, representing a social growth which has its founda- tion in the necessities of the people, and that in consequence the subsequent enormous development and extent of the business is to be traced in the needs of the people, which had been ill-supplied by a multitude of insurance schemes, all of which have since gone into bankruptcy or decay. So much space having been given to the factors leading up to the formation of the Society, I must needs deal very briefly with the actual experience and business history. I have already stated that the first actual business transaction occurred on November loth, when a Mr. W. R. Drake, Cashier of the German Bank of Newark, applied for an insurance of $500, payable at death, and $10 per week, payable in case of sickness, the weekly- premium payments to cease at the age of sixty-five. Mr. Drake, it will be observed on reference to the list of directors, was also one of the members of that Board, and no doubt was influenced in taking the risk by this personal relation to the Society. The application was signed by Mr. Dryden himself, as a witness to the transaction which marks the actual beginning of Industrial insurance in America. It was only by slow degrees that the business became known to the public, nevertheless by December i , 1875, 62 applications had been received. During the month 242 more applications were received, and during January, 1876, the number of new applications reached 558. During a little less than three months 862 persons had made application for Indus- trial insurance on the various plans offered to the public by the Society at this early period of its existence. During the last week of January, 1876, 206 applications were received, which must be looked upon as a very strong indication of the local demand for this class of insurance. As to the character of the business received, it is possible to answer some -questions on this point by the statis- tics of the first one thousand applications, which have been ab- stracted from the records of the Society. Of the first 1,000 appli- cations 25 have been lost or partly destroyed, '29 are duplicates, indicating double insurances, 329 are infantile risks or applica- tions for insurance on persons under ten years of age, while 617 are adult applications, of which 328 were on males and 289 on females. The occupations of the 328 males are given in the 8o HISTORY OF THE PRUDENTIAL. following table, with as much detail as the space at my command permits : OCCUPATIONS OF MALES INSURED IN THE PRUDENTIAL FRIENDLY SOCIETY. Accountant, 2 Agent, 3 Bag-Factory Employee, .... 2 Baker, 6 Bank Employee, 4 Barber, 9 Bartender, I Blacksmith, 6 Bookkeeper 5 Brass Moulder, 3 Butcher, 6 Car Driver, 3 Carpenter, n Clerk, 29 Coachman, 6 Conductor, Horse-car, 3 Driver, Teamster, 8 Druggist, 2 Editor, 2 Engineer, 3 Florist, 3 Gardener, 2 Grocer, 4 Gunsmith, i Hatter 4 Hostler, 4 Insurance, 2 Janitor, 2 Japanner, 4 Jeweler, . . 5 Justice of the Peace, i Laborer, 5 Lawyer, 3 Liquor Dealer i Machinist, n Manufacturer, 5 Merchant, 3 Moulder, 3 Musician, 3 Painter, 3 Physician i Plumber, 2 Salesman, 5 Shoemaker, 5 Student, 30 Surrogate, i Undertaker, 3 Waiter, 4 Miscellaneous Occupations, . . 94 This table would seem to prove that the applicants for this class of insurance represented all the elements of the population, including men employed in well-paid occupations, as well as those who earned their living by day labor. The truly industrial character of this class of risks is clearly indicated by the data represented in the preceding tabulation. THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 8l The age distribution of the 329 infantile applications is given in the following table, as an indication of the demand for this form of insurance at early ages : PRUDENTIAL FRIENDLY SOCIETY. i875-'76. INFANTILE APPLICATIONS. AGES AT ENTRY. AGE L,AST BIRTHDAY. MALE. FEMALE. TOTAL. I 3 5 8 2 24 21 45 3 29 23 52 4 15 22 37 21 18 39 6 17 14 3i I 18 14 19 18 37 32 9 13 10 23 10 12 13 25 166 163 329 This table would seem to prove that there was no selection against the Company in an excessive aggregation of risks at very young ages, but that the distribution of applicants by age periods was normal and fully in accordance with the general distribution of the population at the ages indicated. The reason for the non-acceptance of risks under one year is to be found in the fact that on account of the excessive mortality prevailing at ages under one the amounts which could be insured for under such policies would not be sufficient to attract custom enough to warrant the acceptance of this class of risks. In England it has always been the custom to insure children from birth, or from within a few weeks of the date of their birth, for small sums in return for a weekly premium of one penny. It is self-evident that the large increase in the business operations of Industrial companies must gradually diminish the number of uninsured persons, making it desirable to accept risks from birth upwards, but this point is not likely to be reached in this country for a number of years to come. HISTORY OF THE PRUDENTIAL. The following table will show the age distribution of the 617 adult applicants, with distinction of sex : PRUDENTIAL FRIENDLY SOCIETY. 1875-' 76. ADULT APPLICATIONS. AGB AT ENTRY. MALE. FEMALE. TOTAL. 10-14 15-19 38 43 32 39 S 20-24 52 47 99 25-29 50 46 96 3-34 47 26 73 35-39 19 22 4i 40-44 25 21 46 45-49 24 19 43 50-54 14 14 28 55-59 8 IO 18 60-64 2 8 10 65-69 3 4 7 70-74 i i 2 Unstated, 2 2 Totals, 328 289 6l 7 On examination of this table it will be found that the age distribution was normal, showing no indication of adverse selec- tion of applicants at advanced ages, but rather an aggregation at the productive period of life, when men and women are actively engaged in industrial occupations. The tables given confirm the preceding conclusion, that the demand for Industrial insurance came directly from the industrial population, and that this class of risks was fully represented in the body of the policy-holders of the Society from the beginning. Among other facts brought out by an examination of the early records of the Society, it appears that the method of pay- ment selected by the majority of the applicants was for insur- ance on the weekly- or bi-weekly-payment plan. Out of the 1,000 applicants the information as to method of payment is avail- able in 946 cases, and of this number 484 selected the weekly- payment plan, 130 the bi-weekly-payment plan, 180 the monthly- payment plan, 29 elected to pay quarterly, 75 semi-annually, and j 6 preferred to pay their premiums once a year. For 34 cases the THE PRUDENTIAL FRIENDLY SOCIETY, 1875. 83 information as to method of payment was not stated. Hence, it is clear that in the majority of cases the weekly-premium plan was given preference, for, even in cases where the premium pay- ments were made bi-weekly or monthly, it is to be assumed that this was the choice of the office, to avoid loss of time in making collections. The industrial character of the risks accepted is, therefore, further supported by the distinct preference given to premium payments on the weekly plan. Some further information of interest is supplied by the data pertaining to the amount of insurance applied for. While all of the infantile risks accepted were for burial purposes only, of the 617 adult applicants for which the information is available, 356 applied for insurance payable at death, 136 for burial insurance and additional benefits in case of sickness, 96 for sickness benefits only, 24 for sickness, annuity and death benefits, while for 5 the information is not available. It is, therefore, shown that distinct preference was given to insurance payable at death, and, while some preference was given to sickness insurance in combination with burial insurance, only a very small demand seems to have existed for sickness insurance alone, and the industrial character of the class of risks accepted by the Society is, therefore, further supported by the data showing the preference given by applicants to insurance for burial purposes only. An examination of the data pertaining to the amounts of insurance applied for indicates a tendency to insure for sums of from $100 to $150. Out of 521 applicants, 90 insured for sums under $100, 324 insured for sums between $100 and $200, 66 insured for sums from $200 to $300, 2 1 for sums from $300 to $400, while only 15 insured for sums of $500, which at that time was the maximum amount which could be insured for in the Society. For five applicants the information was not stated. The foregoing data and statistics are clearly in favor of the con- clusion that the applicants for Industrial insurance represented the industrial population, or men and women employed in gainful occupations ; in other words, the superior class of working people of the city of Newark at that period. 84 HISTORY OF THE PRUDENTIAL. CHAPTER VI. THE PRUDENTIAL FRIENDLY SOCIETY, 1876-1877. By the first of February, 1876, it could, therefore, with some truth be said that the experimental stage of the business had been passed, and that no further proof was needed to demonstrate the public demand for Industrial insurance in one of the most important manufacturing cities in the United States. 1 It could even be said with some truth of Newark as an able writer had said of Industrial insurance in England, that "A vast yet silent and unseen revolution is in operation among the work- ing classes. Life insurance until lately has been exclusively confined to the upper and middle classes of Englishmen. By means, however, of what is called the Industrial system of life insurance, adopted by certain offices, life insurance for small amounts is becoming so popular among workingmen that signs are not wanting that the life-insurance movement will permeate upwards and receive an impetus among the higher classes from its adoption by those at the other end of the scale. This great and beneficial work is mainly carried on by agents in London and the manufacturing districts, who go about among the workingmen and persuade them to effect insurance, and then call upon them every week for the premiums. ' ' * While a large portion of the business obtained by the first of February had, of course, been secured as the result of direct per- sonal solicitation by the agents of the Society, proof is not wanting that the working people, on their own account, had applied at the office of the Society for information as to the new plan of insur- ance, to which reference had been made in the daily newspapers of the period. In fact, during December, 1875, it had already become necessary to keep the office of the Society open evenings, * The Life Assurance Handbook, by George Clifford, p. 53 et seq. London, 1876. THE PRUDENTIAL FRIENDLY SOCIETY, 1876-1877. 85 to furnish information and accept proposals from voluntary appli- cants. The Newark Register for this month contained a notice to the effect that " The Prudential Friendly Society in the State Bank Building has found it necessary to keep its office open even- ings until half -past seven o'clock, to transact business with and answer the inquiries of those who are unable to get to the office in the day-time. ' ' Thus, at the very beginning the popular approval and interest in the new plan of family insurance became manifest to an extent hardly anticipated by those in charge of the new enterprise. The friendly interest of the Newark newspaper press con- tinued, and from a long article on the subject of Industrial in- surance in the Sunday Call (Dec. 12, 1875), at that time, as it is to-day, the most important and respected Sunday family news- paper issued in the State of New Jersey, I abstract a few remarks of more than passing importance : In its population of one hundred and thirty thousand souls, Newark has at least fifty thousand who belong to the industrial class. The skill and industry and prudence of these people have raised our city to its present eminence, and given to it its name and fame. Whatever affects their interests is vital to its well-being. The Call has been in the past, and will continue to be in the future, the champion of this important portion of our people, and it will ever be found to speak out plainly for or against any enterprise seeking their patronage, according as it shall merit censure or approval. Following out this line of policy, we have closely scrutinized the Prudential Friendly Society, an institution recently organized in this city for the benefit of working men and women, or, more correctly speaking, for the benefit of working people of both sexes and all ages for the Society accepts members from one year old up to seventy-five. And at the outset we wish to say that the Prudential is thoroughly well organized, and is founded on a firm basis, managed by a Board of Directors composed of some of our most substantial and honorable citizens, and controlled by gentlemen of great intelligence, energy and ability. After a lengthy explanation of the objects and methods of the Society, the Call continued : In the payment required the Society has also carefully consulted the requirements of people of limited means. Any benefit granted by the Prudential may be paid for in weekly, monthly, quarterly, half-yearly or yearly contributions. There is not a mechanic or factory girl in Newark who can not spare a few cents a week to secure a benefit when sick and a decent burial at death. There is not a prudent, industrious father who 86 HISTORY OF THE PRUDENTIAL. can not) without inconvenience, pay a few cents to insure a respectable burial for his children. At the time we were at the office of the Society, which, by the way, is the State Bank building, 812 Broad Street, the Society was not prepared to issue certificates of membership, yet many applications had come in unso- licited, and were filed to be acted upon as soon as the Society was ready for business. Among others that were shown us we noticed applications from one whole family of eight persons from the father, forty-six years old, down to the youngest child, three years old. All these benefits cost the father but a small amount each week, a sum that he could easily pay and not miss from his earnings, while he has the satisfaction of knowing that in the event of misfortune he and those he loves are provided for. The whole scheme of the Prudential seems so completely to meet a need in Newark that we are confident the benefits of the Society will be eagerly sought. It is an institution established for people of small income. It is modeled upon societies in Europe which have existed for many years, and have met with igreat success. We believe the working people of this country are unsurpassed by any people of the world for prudence, thrift and industry, and we also believe that the Prudential, which is the pioneer Friendly Society of America, will be received with the favor which its merits deserve. This unqualified endorsement of the plan of the Prudential was of special value to the Society, since the Sunday Call was then, as it is at the present time, strictly a family newspaper, and one of far-reaching influence among the industrial population of the city and vicinity ; and it was of no small importance to have the Call endorse the new plan of family insurance in words which were indicative not only of a clear comprehension of the system of Industrial insurance, but also, at the same time, of the needs and wants of the industrial population of the city. While in its early stage some business, or even a considerable proportion of business, might have been obtained by voluntary applications, it was early evident that it was necessary to employ agents, or solicitors, for the purpose of making the merits of the plan more generally known, as well as for the purpose of collect- ing the weekly premiums, which were gradually assuming con- siderable proportions. Accordingly, the Society advertised for canvassers, and I abstract the following from one of the Newark newspapers, dated December 18, 1875 : WANTED ! Canvassers for the Prudential Friendly Society. This first effort in this country to establish a Friendly Society worthy of the patronage of all THE PRUDENTIAL, FRIENDLY SOCIETY, 1876-1877. 87 classes, is meeting with a generous response. People in these hard times are more than usually thoughtful in making provision for sickness, accident, old age, and a burial fund, beyond the reach of the exigencies of business. Intelligent ladies and gentlemen can secure good districts by applying to the principal office. 812 BROAD STREET, STATE BANK BUILDING. The significant fact in this advertisement is that female, as well as male, agents were to be employed as solicitors and collectors, and, while this may not have been the first instance of the employment of women in the life-insurance business, it certainly was one of the earliest experiments in this direction ; and while the practice, in later years, was discontinued, there are still at the present time, women agents employed in the Industrial Department of the Prudential Insurance Company. Every step which had been taken by Mr. Dry den and his associates in the early management of the Society had been most carefully considered to insure, if possible, complete success from the beginning, not only in matters of general importance, but also in minor details, likely to demand consideration at some future day, when the Society should have reached considerable proportions. How thoroughly in earnest Mr. Dryden must have been, and how anxious to do justice to both the Society and its members, is in no case better illustrated than in his early corre- spondence with Mr. Clark, who had now been ofiicially appointed consulting actuary of the Society. In perfecting the Industrial insurance contract, Mr. Dryden considered fully and seriously the question of surrender privilege of some kind or another in cases where policies had lapsed for non-payment of premiums within the limit of grace granted by the Society in cases of default. Mr. Dryden seems to have stated his views in detail to Mr. Clark, who, under date of November 22, 1875, replied as follows : Your favor of the igth instant, asking my opinion as to the advisability of making some provision in your Annuity contracts by which members may receive some portion of their contributions in case they discontinued their payments after having made them some time, is before me, and I answer it as soon as practicable, after having given it due consideration. I should advise you by all means to deal equitably with such cases as they arise, but / hardly think it advisable to make any stipulation upon the subject in your contract. If you were to do so, in the case of the Annuity contract, to be HISTORY OF THE PRUDENTIAL. consistent you would also have to do so in the case of the sickness and burial-fund contract, and to make upon any rational basis perfectly definite stipulations that your members could readily understand in all these cases would involve you, before entering upon business, in no little additional calculation. * * * * It is, in my judgment, better to derive the data for such calculation [of surrender value] from your own experience, than either from the best assumptions or the experience of other societies, which may have been quite different from what yours will be. I am aware, of course, that there is a growing opinion in favor of such stipulation [of surrender value] which is not without its foundation, and in procuring business it might be some advantage to have them, but, upon the whole, / should avoid them for the present. For the discussion will no doubt throw more light upon the subject and bring about more unanimity of opinion, as to how such stipulation ought to be fixed, as well as more unanimity of practice in the allowance they contemplate where they are not inserted in the contract, and you can take a step forward in this direction at any but it will not be easy to take a step back. This letter is of more than passing importance, in view of latter-day developments and improvements in the Industrial insurance contract. It furnishes historic proof of an earnest effort on the part of the founder of the Prudential to grant, from the start, a cash or other surrender value to policy-holders com- pelled to lapse their contracts. It is a clear demonstration of the spirit of fairness and equity which has characterized all the business transactions of the Prudential with its millions of policy-holders, and to which is largely due the immense popu- larity of the system from Maine to Colorado. It is made clear by this letter, containing as it does the best available actuarial testimony of the time, that if cash-surrender privileges or paid- up policies were not granted during the early years of the Company's growth, it was because actuarial experience was against such a practice ; and while in later years the Industrial companies, and especially the Prudential, made many valuable and far-reaching concessions on this point, it was because they acted once more upon the best actuarial advice, and waited until, in the light of their own experience, the way was clear for grant- ing privileges which, once conceded, could not, without perma- nent injury, be easily withdrawn. Thus it is shown that due consideration was devoted to the question of surrender values at the very beginning of the business in this country, and it is equally clear from subsequent results THE PRUDENTIAL FRIENDLY SOCIETY, 1876-1877. 89 that, of however much theoretical value such concessions might be, practically it was a point of small importance at the time, since cases of hardship resulting from the lapsing of policies could not arise until such policies had been in force a considerable period of time, while to those who really wished to remain mem- bers of the Society it was easy to revive lapsed policies by the payment of such arrears as might have accumulated. This, it is plain, was the view of the public, which in ever-increasing numbers became patrons first of the Prudential, and, after 1879, of other Industrial insurance companies which followed it, although no cash surrender or paid-up provisions formed part of the Indus- trial contract until after the business had been some sixteen years in successful existence, and some 5,000,000 Industrial policy-holders had been secured. - Hardly had the Prudential Friendly Society commenced to issue its certificates and secured the local reputation and respect of which I have spoken at some length, when, as it was perfectly natural to expect, efforts wera madei^L. unscrupulous individuals to float similar enterprises, j apparently identical in scope and method with the Prudentim/but, as a matter of fact, similar in objects and aims with a former type of fraudulent co-operative societies. Had these efforts been honest and straightforward nothing could be said against them, but, being without exception base and plainly fraudulent imitations of the Prudential plan of Industrial insurance, they, for a time at least, caused no small degree of anxiety and concern to Mr. Dryden and his associates. One of the first of these imitations of which I have record, and probably the very first, was the Prudential league of Harrisburg, Pa., an organization chartered under the laws of Pennsylvania, w T ith the Governor of the State as president. The policies issued by this society were, it would seem, guaranteed by a regular life-insurance company, somewhat along the lines of the former ' ' Bunds " or " Unions, ' ' to which reference has been made. There was, in this effort, a clear intent to trade on the name of the Prudential, but, as was natural, the society, after a brief struggle, by reason of its inherent weakness, was forced out of existence. It is quite probable that the men who managed the concern were the same who, during the latter part of the year, founded 90 HISTORY OF THE PRUDENTIAL. the Prudential Mutual Aid, also of Harrisburg, Pa. , which had a career extending over several 3^ears, but which also finally ended in receivership, causing a not inconsiderable loss to the unfortunate membership. The society was based on the principles of co-oper- ative insurance, and was nothing more than an attempt to defraud the public by trading on the name and principle of the Prudential, which by this time had been recognized as a success in the new domain of life insurance for the industrial population. Such attempts at imitation were menacing to the Prudential Society only in that the public was likely to confuse the fraudulent practices of the former with the honest and straightforward efforts of the latter. Continued public interest in the development of the Pru- dential is evident from the numerous inquiries made as to the nature of the new system of life insurance, which, I may add, met only with encouragement on the part of those who had the management of the Society in their charge ; and perhaps no better illustration of this growth of a spirit of inquiry can be furnished than the following open letter, addressed to the Newark Daily Advertiser of January 17, 1876, which throws a most inter- esting side-light on the progress of the life-insurance idea among the wage-earners of the city of Newark : EDITOR Advertiser: The industrial classes of Newark are a much more important factor in the prosperity of the city than is usually consid- ered, and perhaps more so than any other, with the possible exception of capital. This class is usually thoughtful and often provident, and therefore to the number of thousands have become associated in various societies for mutual aid and protection in the hour of need. No man will attempt to deny the value of association for this purpose. But the philosopher, political economist or whatever name is his will see the importance of association upon a proper basis. What is the basis upon which these various mutual societies are con- ducted ? Is there any mathematical or scientific basis to any of them ? So far as we know, there is nothing beyond that which experience gives. This is worth something, but is it a sufficient guarantee for the future ? Would the Life Insurance Companies be considered safe if their work was carried on by the light of experience only ? No, but the law steps in and requires them to lay aside for every risk a reserve large enough to meet that risk at maturity, at old age and death, and no such company is safe, even if it has a large amount of cash in hand, unless it has a reserve sufficient to meet this liability upon a thoroughly mathematical basis. Here, then, is a great question which concerns 10,000 and perhaps 50,000 of our industrious and clear-headed mechanics. THE PRUDENTIAL FRIENDLY SOCIETY, 1876-1877. 91 Who will take up this subject and not leave it until we know where they stand ? Perhaps the Board of Trade is in the position to do it. Certainly r , the subject is of the greatest importance to Newark, and it is therefore worthy of their attention. Let them invite discussion by able minds, and if the basis is insecure let them memorialize the Legislature that such general laws may be enacted as will oblige all such societies to provide the proper reserve or show what is their fund and what their risk, so that people may know what they are doing before they pay their money. The Board of Trade can do no nobler work than throw their arms around these people and protect them with their influence, their intelli- gence and procurement of proper laws. (Signed) PROTECTION. It was not until April 29, 1876, that the Advertiser made further reference to the proposed investigation of the system of Industrial insurance by the Board of Trade, and I can do no better than quote the article in full, as a further contribution to our knowledge of the development, at this period, of the Indus- trial insurance idea in the city of Newark among all classes of the population : It is suggested to the Board of Trade that it invite information upon the system of industrial insurance that has recently been introduced by the Prudential Friendly Society. This is a matter that would legitimately come before such a body, and one which, as large employers, the members are directly interested in. This system aims to improve the condition of the class of people upon whom these gentlemen depend for skill and industry in the various departments of business activity. It makes them provident and self-reliant. It encourages thrift and good morals, and assists in producing useful mechanics and law-abiding citizens. Our large employers well understand that money can not be better expended even as a matter of economy we say nothing from the humanitarian standpoint than when used in elevating the condition of their help. But when the hands can themselves be induced to take a wise thought and provide for the future, it greatly lifts them up. This is the beneficence of this system of industrial insurance. Some of our largest employers deem this matter so important that they establish associations among their employees and require each person to contribute weekly to the fund. But the limited number of hands employed by most establishments makes this impracti- cable with them, and therefore the great mass of the industrial class must look for protection to some public institution that carries on the business. Now, it is important to employer as well as employed that trust should be placed in a really solvent, reliable institution. Herein the gentlemen who compose the Board of Trade can greatly aid the people by becoming themselves well informed and imparting information to their employees. 92 HISTORY OF THE PRUDENTIAL. Will the Board invite some competent gentleman to address them upon the subject of industrial insurance? The success of the Prudential clearly indicates the importance of the matter. This Society, recently organized, in the midst of hard times, with a system untried in this country, sought patronage almost entirely among people of limited means, and confined its operations to the city of Newark, yet it has already received over 4,000 members. Doubtless the character of its officers and directors has done much to inspire confidence and popularize the institution. But back of this lies the fact that the industrial classes appreciated and eagerly embraced its provisions. They needed the Society. We may accept this as evidence that this is only the germ of a system which is to grow up and exercise a great influence upon the social condition of the workingman of America. It has already done so in England, where 8,000,000 people now are interested in this class of provident associations. It is probable that there will, in a few years, be as great a number interested in similar institu- tions in America. It is important in the infancy of the business, and before mistakes are made that can not be corrected, that there shall be had a full knowledge of those laws that regulate the risks attached to sickness and burial insurance. The Odd Fellows, Knights of Pythias, and all kindred associations are deeply interested in the matter. A proper knowl- edge as to whether their rates of contributions are sufficient to enable them to pay in the future the benefits they promise, is of vital importance to them, and a movement such as we have suggested on the part of the Board of Trade would start an inquiry that would result beneficially. One of the most suggestive remarks in this quotation is the sentence that ' ' We may accept this as evidence that this is only the germ of a system which is to grow up and exercise a great in- fluence upon the social condition of the workingman of America. ' ' These were truly prophetic utterances at a time when hardly the foundation had been securely laid of the first Industrial insurance company in this country. a company which at the present time has a large portion of the population of Newark insured on its plans of Industrial, Intermediate or Ordinary life insurance ; a company which at the present time has more than 3,500,000 Industrial policies in force on its books on the lives of American working people, and has indeed grown into an institution of great influence upon the social condition of the workingmen of America. The early success of the Society had been little short of marvellous, and by May 22, 1876, the five- thousandth application for Industrial insurance had been received. The difficulties which had been experienced had not been sufficient to hinder materially the rapid growth of the Society in various directions, THE PRUDENTIAL FRIENDLY SOCIETY, 1876-1877. 93 but, as has previously been pointed out, the fraudulent imita- tions of concerns operating under similar names and following similar plans were likely, in course of time, to prove a serious menace to the good name and standing of The Prudential. The difficulties experienced in obtaining the services of good and reli- able agents had often made it necessary to discharge inefficient employees, who would make use of their limited experience to establish societies or associations under names similar to the Prudential. Thus, about April, 1876, The Prudential Benefit Society had been organized in Newark by two men discharged from the service of The Prudential Friendly Society. The Newark Sunday Call, under date of April 2, 1876, found it necessary to call public attention to the danger of confusing a solvent society with insolvent imitations. However, in spite of such discouragements and disadvan- tages, the Society continued to make progress, and by December 31, 1876, there were 4,816 policies in force, for an aggregate amount of insurance protection of $443,072. The total premium income during this year had been $14,495, of which $1,956 had been paid for claims. The total expenses for the year had reached $16,253, or $i , 758 more than the income. The deficiency, together with the necessary amount to be held as reserve, had, of course, been paid in by the stockholders ; and thus, after almost fifteen months of actual experience in business operations, the Society was far from being in a prosperous condition financially, although, in the nature of the business, nothing else could have been expected for a number of years, or until the business should have become self-sustaining. 94 HISTORY OF THE PRUDENTIAL. CHAPTER VII. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, 1877-1879. Thus far the business of the Society had practically been lim- ited to the city of Newark, but by November, 1876, it was decided to extend business operations to other cities of the State. Before this important step was taken it had been arranged for Mr. Dryden to visit England for the purpose of making a personal study of the methods and results of the British Prudential and the large Friendly Societies operating in the various parts of the kingdom, and with this object in view he sailed for Liverpool on November 28th, fully supplied with letters of introduction, not only to the managers of the leading societies and companies, but also to the leading actuaries and government officials connected with the administration of the various insurance institutions and Friendly Societies. This local investigation of conditions affecting Industrial insurance in England had become more and more im- perative as the business of the Society had increased, and experi- ence was gained which permitted of a careful study of the proba- ble normal rate of mortality and sickness among insured lives in this country. Hence the importance of a personal investigation, on the part of Mr. Dryden, of the actual conditions affecting Industrial insurance in England, and the necessity of a personal study of the causes and reasons that induced the Prudential, the Royal lyiver and other societies to abandon the sickness branch of their business after a short experience, which, it is clear, must needs have been unfavorable. Without entering extensively into the question as to why the American Prudential finally followed in the steps of the English companies in abandoning its sickness branch, it may briefly be stated that partly on account of the small demand for such insurance in this country, partly on THE PRUDENTIAL INS. CO. OF AMERICA, 1877-' 79. 95 account of the inherent difficulty of transacting this form of insurance on a profitable basis, the Society, after having given this branch of the business a fair trial, finding it impossible to transact the same profitably or safely, followed other companies in limiting its business to whole-life policies on the level-premium plan. It may not be out of place to add the words of Mr. (now Sir) Henry Harben in explaining to the Royal Commission on Friendly Societies the reasons as to why his company had discontinued transacting a sickness insurance business. Mr. Harben stated that, as a matter of fact, his company found that "it did not pay," and, further, that "We found that we were totally unable to cope with the fraud which was prac- ticed," and hence Mr. Harben' s conclusion that "We have tried it, and I think our agents are the most honest, and we can not manage it. " * During his stay in Kngland Mr. Dryden gained much additional information, and became so thoroughly informed as to the most minute details of the vast business of the British Pru- dential that on his return he not only materially changed the practical working basis of the Society, but at once took steps to have the same reorganized on a purely commercial basis as the Prudential Insurance Company of America, which change in name took place by an amendment to the charter of The Pru- dential Friendly Society, which passed the New Jersey Legisla- ture during the session of 1877, and became a law on March i5th of that year.f Thus far, as has been stated, the business operations of the Prudential had been almost entirely confined to the city of Newark, but after Mr. Dryden' s return from England steps were immediately taken to open offices in other cities of the State. This was not only in accordance with the laudable ambition to increase the business of the company, but was also due in no small degree to a yielding to pressure brought to bear on the * Third Report of the Royal Commission on Friendly Societies, 1873, P- 73- t lyife Insurance Charters, p. 154. The Spectator Company, New York, 1895. 96 HISTORY OF THE PRUDENTIAL. managers of the Company by leading citizens of surrounding towns, who by this time had fully realized the value of Industrial insurance from the standpoint of the taxpayer and public-spirited citizens interested in the betterment of the economic and social condition of the industrial masses. Next to Newark, the most important manufacturing city in the State in 1877 was Paterson, which in that year had an esti- mated population of about 43,000, and which, according to the Census of 1880, was one of the most important manufacturing centres in the United States. During the early part of April r leading citizens of Paterson, including Mr. Garret A. Hobart, the late Vice-President of the United States, addressed a letter to the President of the Prudential, requesting a public explanation of the essential principles of Industrial insurance.* The following is a copy of the letter received by the Company : PATERSON, April 6, 1877. AU,EN L. BASSETT, ESQ., President of the Prudential Insurance Company of America, Newark, N. J. Dear Sir : Understanding that your Company is about to open an office here for the transaction of its business with the citizens of Paterson, we the undersigned beg leave to request that you will address a public meeting of citizens interested in this new system of Insurance, in some public Hall, and at such time as may suit your convenience, and explain its peculiar features. Yours Respectfully, JOHNJ. BROWN, JOHN SWINBURNE, BENJAMIN BUCKLEY, GEORGE WURTS, THOS. N. DAI.E, SOCRATES TUTTI,E, GARRET A. HOBART. * Such lectures and public meetings on the subject of Industrial insur- ance were quite common during the early days of the business, and much good was accomplished by placing the merits of the "new departure" plainly and emphatically before the people. THE INSURANCE COMPANY HOME OFFICE, JEBSST. CHARTER 5 s S3 E3 IE3 "37 "OVA. I . Huolu all ftteit 1)5 tljciif presents, That THE PRUDENTIAL INSURANCE COMPANY OF A.MERICA, in consid- eration of the representations find agreements made to "and with them, in the application for this Policy, respecting tiie health, habits and condition of the person named and described in the first column of the schedule embodied herein, and also respecting any matter upon which this contract is based, and in further consideration of the sum of money, stated in the second column of said schedule, to them in hand paid, and of a like sum to be paid to said Company, or their authorized Agent, on or before each and every Monday subsequent to the date hereof, during the lifetime of said person, doth hereby promise and agree that, upon satisfactory proof of the decease of said person, they will pay, or cause to be paid (subject to the articles, conditions and agreements endorsed hereon), unto his or aer executors or administrators, the sum of money stated in the third column of said schedule. }3fOt) t'JJrt altOagB, that the production by or on behalf of this Company, Its successors or assigns, of a receipt, of the description hereinafter mentioned, for the sum of money insured hereby, or of other sufficient proof of payment by said Company of said sum of r: one? to any or either of the persons hereinafter mentioned .and described, and hereby authorized and empowered to sign said receipt for unit jeeeive the said sum of money, said receipt being signed by any person being either an executor or an administrator, husband or wife or relative by blood or connection by marriage of the person designated in the first column of the schedule embodied herein, shall be final end conclusive evidence to all Intents and purposes that such sum has been duly paii' unto and received &y ,d& person or persons lawfully and flghtfully entitled to receive the same, and that all claims and demands whatsoever, upon or against uiis Company to isspeet to tins Polity, iuive been fully satisfied. $rOt)OJrtJ, t)0toetorr, that this Policy is issued and accepted subject to the restrictions, conditions and agreements Itorato jwnexed, which it Is agreed form part of this contract, and-upon the express stipulation that this contract shall become absolutely vofW, and all premiums paid thereon forfeited to said Company, if the considerations for which the same is granted are not true, or shall not >K tn all respects, performed and observed ; or if the said person shall, without the .written consent of said Company endorsed, hereon, * beyond the settled limits of the United States, or the British Provinces, id North America; or if the said person shall die by the hands el justice or by suicide, whether sano>or insane, or in consequence of the use of intoxicating drinks, opiates or narcotics; or of being engaged In any unlawful act ; or if the said person shall have previously obtained, from said Company, a Policy which shall, at the decease of said person, be in force, insuring a sum of money in consequence of his or her decease, unless the Policy first issued contains express permission that this Policy may also be in force at the same time. %\ Y FIRST COLUMN. ' SECOND COM MN. THIRD COLUMN. SUM INSURED, Subject to the conditions endoned hereon. Ctt. # . K . It any erasure or alteration snail b made in this Policy, except by endorsement made and signed by an officer of the Company, the Policy shall be void. *. If any attempt shall be made by any person or per- sons interested in this Policy to obtain money from the Company, under this Policy, upon any false or fraudulent claim or representation, then the said Company shall have the right to cancel this Policy, without notice to such person or persons ; and the said person or persons shall thereupon forfeit aU rights and privileges In the Company. r if the same was ill-adapted to American conditions, the sooner it was found out the better. Certainly, nothing would have been more disastrous to the cause of genuine life insurance for working people than the failure of Industrial insurance, once the system had assumed vast proportions. From the standpoint of public policy, as well as from the standpoint of the individual policy-holder, it was of the utmost importance that Industrial insurance should be subjected to every test, difficulty and trial, so that, if failure was inevitable, it should take place before the system had grown into one of considerable magnitude. It is not too much to say that no form of life insurance or other financial undertaking has ever experienced more difficulties and been subjected to more trials, testing its inherent worth, than was Industrial insurance, as 102 HISTORY OF THE PRUDENTIAL. practiced by the Prudential during the early years of the Com- pany's operations. As the business of the Prudential increased from year to year, more and more intelligent public consideration was given to the subject, and, as an indication of the public recognition of the value of the new system of insurance, I can not do better than quote the following extract from a long article in the Insurance World of April, 1878, as an illustration of the conception and appreciation of the subject at this period : We think that this system of insurance among the poor if worked up, would become as popular here as in England ; some of our leading compa- nies should set aside a good sum for the purpose of testing it. The agents now in the field could have it under their care, appointing the collectors in every workshop, street or village, whose business would be to take risks, collect moneys every week or two weeks, and pay it over to the agent. The small sums insured, payments made, and the absence of bother, would soon recommend it; the poor would take hold of life insurance as they have not yet done, and millions of insurance would be the result. The principal value of the article is to be found in the earnest plea for insurance for small amounts and premiums pay- able on the weekly plan, and, as the Insurance World well said, that ' ' If this plan were once placed before the public, millions of insurance would be the result. ' ' While the Prudential had been successful in introducing genuine Industrial insurance on the plan of the British Prudential to the working population of the large manufacturing cities of New Jersey, other companies, like the John Hancock Life Insur- ance Company of Boston, had failed to make a success of the plan of monthly-payment insurance ; while the Metropolitan had made but a very limited success of its ' ' Bund " or ' ' Union ' ' arrangement with various organizations attempting to transact an insurance business on the weekly-payment plan. In reference to the Bund plan of the Metropolitan, the position of the company was well stated in an article in the Spectator for May, 1878, from which I quote as follows : The Metropolitan has met with better success in doing so-called indus- trial insurance than any other company in the United States. It has done this through the agency of a powerful social organization of Germans an aid which no other company has been able to secure for such a purpose. In this work the company has undoubtedly extended the benefits of life insurance among a worthy class of people, where, without this or some THE PRUDENTIAL INS. CO. OF AMERICA, iyj-C). 103 similar agency, but little life insurance business could be done. Small shopkeepers, mechanics with small incomes, laborers and others who would not ordinarily be induced to look enough at the subject to apprehend the benefits of life insurance, or to believe that its benefits were within their reach, have been approached by means of this organization which confers substantial benefits upon its members aside from the life insurance privileges extended to them and have been persuaded to protect their families by such an amount of life insurance as they could pay for without serious inconvenience. The Spectator properly speaks of this form of insurance as " so-called " Industrial insurance, for an attempt to transact life- insurance business on the weekly-payment plan does not, as such, represent Industrial insurance as it is understood by those who manage the business at the present time. As has been pre- viously pointed out, an effort to transact an insurance business on the weekly-payment plan had been made as early as 1847, by the Mutual Benefit of Newark, and in 1868 by the American Popular Life and other companies ; but these efforts failed, in that no provision had been made for the collection of the premiums, the insurance of persons at all ages, and the adjustment of amounts of insurance to the premiums as a unit, instead of, as is the prac- tice in Ordinary insurance, the adjustment of the premium to the amount. While writers on the subject of life insurance for the masses recognized more or less the great value and success of the British Prudential in developing in England its system of Industrial insurance, there were many who were skeptical as to the question whether the system would ultimately prove successful in the United States. Among others, the Spectator, then, as now, one of the leading insurance publications in this country, in an article on the success of the British Prudential, expressed the belief that the British form of workingmeii's insurance was not likely to prove successful among the people of this country, for, it was argued, they would not insure for small sums, nor would they be willing to pay premiums in weekly instalments, as is the practice, and one of the essential principles of workingmen's insurance on the Industrial plan. I can not do better than quote briefly from the article in the Spectator for May, 1878, as follows : It is not surprising that the report recently made by the Prudential Assurance Company of London has attracted a great deal of attention and IO4 HISTORY OF THE PRUDENTIAL. elicited extended comment in the United States. The report shows that the company has met with very great success in what it calls its Industrial Branch, and certainly success in this branch of its business means valuable service rendered to a large and needy class of people, who if they did not make this or some similar provision would leave their families in poverty and generally in pauperism. No words can exaggerate the value of the work this company is doing among the laboring people. It promotes tem- perance, frugality, thrift and all the kindred mortal virtues, and saves tens of thousands from a life of pauperism and crime, and from a pauper's or felon's death. But those who look upon the success of this company as something which can be equalled or even imitated in the United States ignore some patent facts. And any company which undertakes that class of business in the United States expecting to meet with success comparable with this will cer- tainly be disappointed. The failure of the efforts which have hitherto been made in this country, in the direction of so-called Industrial Insurance, is not attributable to a want of intelligence as to methods nor to a want of persistence on the part of officers and agents (albeit these defects have characterized the efforts), but to the fact that such insurance is not adapted to the population of the country. And this naturally leads to the consideration of a field which life insurance in the United States has not hitherto cultivated as much as it ought to do, and in which good results may be produced. Pretty much all the efforts of companies and agents have been made among those who could afford or could be induced to take policies for large sums. Many solicitors regard time spent in talking about a policy for less than $10,000 as time wasted ; and $5,000 has been the minimum sum worth any consideration at their hands. Of course, the temptation to seek those and only those who can afford to pay several hundred dollars per annum for life insurance is strong, and the ambition to get ap- plications for large policies is a worthy one, but companies and agents must thereafter look for the most of their business among another class of people, as well as among the same class with reduced incomes and modified estimates of their ability to pay and of the requirements of their families. There are in this country many thousands who need life insurance and who can afford small policies say, from $1,000 to $2,500 who have never been solicited by competent men. The solicitors who have been sent to these persons have been beginners in the work who had not learned how to present the advantages of life insurance or the merits of the company they represented ; or those who, though not beginners, were incompetent from lack of intelligence or lack of industry, and the result has of course been failure. If a competent solicitor, one who has hitherto been able to take applications for large policies, would go among these people and work with as much persistence and enthusiasm as he has customarily employed, and with entire frankness, he would find the result profitable to himself and any really good company he chose to represent. THE PRUDENTIAL INS. CO. OF AMERICA, 1877-'* 79. 105 On careful examination of this article an experienced life underwriter will at once notice that the plea of the Spectator for an extension of the principles of life insurance to mechanics and others for policies of from $1,000 to $2,500 was really a plea for what, in course of time, became known as "special adult business " or " Intermediate insurance," as transacted to-day by Industrial companies in all parts of the country. This form of insurance could not be written on any considerable scale until the vast population unacquainted with insurance principles had been educated by slow degrees, first, in the habit of systematic saving ; second, in a true appreciation of the beneficence of legitimate life insurance, even in small amounts as they are returned to policy- holders by the methods of the weekly-payment plan. Life insur- ance as practiced by the Ordinary life companies during the later seventies and early eighties was really class insurance, open only to men of considerable income and means. Industrial insur- ance, however, did appeal to the industrial population to an extent no doubt surprising to those who did not consider the system applicable to the United States. And nowhere, perhaps, was this tendency more clearly recognized than in a later number of the Spectator \ published during August, 1878, and in which the truth was stated, that "life insurance is about descending from a wholesale to a retail business. ' ' The early error on the part of the Spectator is easily explained by the paucity of general information on the subject at the time, and the unostentatious manner in which the problem of Industrial insurance was actually being solved in Newark, less than ten miles distant from New York. In justice to the Spectator it must be said that it was not the only insurance journal which, at a critical moment, seemed rather to oppose the development of Industrial insurance in the United States ; for, as a matter of fact, even the Monitor, which had at various times done much to call public attention to the prin- ciples and practice of Industrial insurance, made unfavorable reference to the same in its November issue in 1878. In the words of the Monitor, ' ' the facts leave it more than ever open to doubt whether Industrial insurance can be successfully carried on according to the Ordinary methods of life insurance," and, rather than approving of the British plan of dealing directly with the policy-holders, the Monitor expressed the opinion that ' * The company, to be economical, can not deal directly with individuals. 106 HISTORY OF THE PRUDENTIAL. It must work through and deal with subordinate organizations, which shall themselves furnish the membership, and relieve this great item of cost. If this be true, Industrial insurance can only be successfully worked through the ' Bund ' system, such as has been adopted by some of the American companies. ' ' Fortunately, this advice on the part of the Monitor was not heeded, for at the very time one of the leading organizations, a well-known German insurance and relief society, with nearly 7,000 members in different cities, was rumored to be in difficulties, and it was not long afterwards when the concern went out of existence, its obligations being assumed by a regular Ordinary life company. However discouraging such remarks as the preceding must have been to Mr. Dry den and his associates, the progress of the Prudential was never for a moment seriously hindered, though the difficulties and discouragements would easily have brought institutions resting on a less substantial basis to an early end. At a time when Industrial insurance was being actively placed before the public, practically every other form of insurance for workingmen had either been tried or was now being put for- ward, either on the plain basis of a business undertaking in the name of assessment insurance, or on the semi -business basis of so-called fraternal-insurance organizations. A writer on the subject, who seems to have given considerable attention to this side of the question, stated that there were then in the United States, approximately, 200,000 persons insured in Masonic Orders, Odd Fellows' Associations, or other forms of fraternal insurance. One of the more prominent and important of these fraternal associations was The United Brethren Mutual Aid Association of Lebanon, Pa., which by 1878 had reached a membership of some 13,000. After an existence of twenty-seven years the society failed in 1896 in consequence of inherent defects which must sooner or later prove the downfall of all similar institutions. The pathetic side of such failures has seldom been better brought out than in the following letter from Salem, Oregon, published in one of the insurance journals during 1896 : When I was a )^oung man I was induced to join the United Brethren Mutual Aid Society, which, at that time, was considered the strongest fraternal order in existence. I have faithfully paid my assessments for nearly a quarter of a century, and now in my old age, when I most need THE PRUDENTIAL INS. CO. OF AMERICA, 1877-79. 107 insurance and am unable to get it in a regular life insurance company, I find myself left without any insurance whatever because this order, that I placed my reliance in, went into the hands of a receiver March 17, 1896. **##/ seems almost like a criminal act to induce people to place their faith in institutions of this kind. p. C. HETZWJR. If Industrial insurance had served no other purpose it would have full justification for its development in offering a safe and substantial substitute for these so-called co-operative or fraternal insurance associations. io8 HISTORY OF THE PRUDENTIAL. CHAPTER VIII. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, After a period of three years and two months of actual business operations, The Prudential, on January i, 1879, was still the only company transacting Industrial insurance in the United States, and, while satisfactory progress had been made, no other company had attempted to adopt the plan of The Prudential. The number of policies in force, which had been 1 1,226 on Decem- ber 31, 1877, had increased to 22,808 policies by the end of 1878. The insurance in force had been more than doubled during the year, and that, too, in spite of the fact that the business operations of the Company were confined to the State of New Jersey. The business being now restricted to the insurance of sums payable at death, more publicity was given to the premium rates, and the following are abbreviated copies of the tables in use at this time : INFANTILE RATE TABLE. TABLE OF BENEFITS PAYABLE FOR A 3-CENT WEEKLY PREMIUM. No HIGHER PREMIUM CAN BE TAKEN. (First used April 2, 1877.) AGE LAST BIRTHDAY. AFTER THREE MONTHS. AFTER ONE YEAR. I $10 00 $11 00 a II 00 12 00 3 12 00 13 00 4 13 14 oo 5 14 oo 15 oo 6 15 oo 18 oo I 18 oo 21 00 22 OO 28 oo 9 25 oo 35 oo 10 33 46 oo ii 45 oo 60 oo 12 60 oo If the child dies within three months from the date of the contract, no insurance will be payable. THE PRUDENTIAL INS. CO. OF AMERICA, 1 09 It will be noted that under this table the Company limited the premium on policies for persons under the age of thirteen to three cents, while no benefit was payable until the child had been three months insured. This practice during the early years of Industrial insurance is another indication of the conservative and cautious spirit which has been such a marked characteristic of the managers of The Prudential Insurance Company of America. ADULT RATE TABLE. THE; PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1879. WEEKLY PREMIUMS. AGE. FIVE CENTS. TEN CENTS. TWENTY-FIVB CENTS. FIFTY CENTS. *3 $H7 75 15 114 oo 20 103 oo $206 oo 25 90 50 181 oo $452 50 30 79 oo 158 oo 395 oo 35 67 75 135 50 338 75 40 56 75 "3 50 283 75 45 45 50 91 oo 227 50 $455 oo 50 37 oo 74 oo 185 oo 370 oo 29 75 59 50 148 75 297 50 60 23 25 46 50 116 25 232 50 65 17 oo 34 oo 85 oo 170 oo 70 12 50 25 oo 62 50 125 oo 75 9 50 19 oo 47 50 95 oo How carefully these tables had been calculated is illustrated by the fact that to-day, after twenty years, the rates are practi- cally the same, while the benefits have been increased in the direction of more liberal concessions, with special reference to paid-up policies, cash-surrender values, etc. The only material changes or increases in the amounts of benefits which have been made are to be found under the infantile table, where larger amounts are now paid for the same unit of premium. This is due largely to the increased duration of infantile life, or, conversely, to the diminished mortality of children under ten years of age which has taken place during the past twenty years. That the difficulties, disadvantages and even dangers of the new experiment in life insurance were fully realized by outsiders is incidentally made clear by some remarks addressed to the oifi- cers of the Company, and especially to Mr. Dry den, at a banquet IIO HISTORY OF THE PRUDENTIAL. and annual reunion of the officers and agents of The Prudential in January, 1879 ; and it may not be out of place to give space to a brief abstract of the remarks of Dr. Burnett, who spoke as follows : In conclusion, gentlemen directors, allow me to give my most agree- able testimony to the thorough work done in this office. The Prudential Insurance Company of America is skillfully managed on an efficient busi- ness basis. Its financial affairs are transacted with rigid economy, united, when the interest of the Company demands it, with a most liberal tact. There is nothing niggardly here, although every item of expense is sub- jected to the closest scrutiny. Gentlemen, your work is well done. * * * Never was a " Captain " more ably supported by a lieutenant than is our President by our most efficient Secretary. As long ago as June 9, 1873, when I had the pleasure of examining the Hon. John Whitehead, the first appli- cant for a policy in The Widows' and Orphans' Friendly Society, out of which The Prudential arose, he being the President of the Society at that time, and Mr. John F. Dryden was the second applicant for $i ,000 in the same Society our Secretary was already revolving in his fertile brain the idea of The Prudential Company in America, founded on the same principles as the great Prudential of London. He often conversed with me upon the subject, and prophesied its coming formation and its coming success. His whole soul appeared to be bound up in the idea, and I rejoice that the Company has, as its representative in this capacity, a gentleman of rare executive ability with a life-love for his work, a true and an honest man God's noblest work. This view of the success of The Prudential, increasing public appreciation of this form of insurance, the officially attested facts indicating the progress and financial solvency of the Company, all accessible to the managers of other insurance institutions, made it clear that the time was not far off when Industrial insur- ance would be undertaken on a larger scale and by other com- panies with an ample capital and an established agency force likely to prove of material aid in developing new territory. The opportunity for new Industrial insurance companies was apparent and recognized by many of the insurance journals of the period. Thus, in December, 1878, the Insurance World of Pittsburg, Pa. , called attention to the fact that ' ' Industrial insurance, notwithstanding the expense, is a growing necessity in our workshops and factories. Some of our large companies might reap a harvest in this direction. The Travelers, if we might make the suggestion, is a company well adapted to take hold of this work." Thus, by December, 1878, the growing THE PRUDENTIAL INS. CO. OF AMERICA, l879~'8o. Ill necessity for Industrial insurance was becoming recognized out- side of the city of Newark, and in Boston I find that there was in existence, in 1879, The St. Peter's Workingmen's Benefit Club, in a manner a typical American Friendly Society, with 73 members, in which dues were paid weekly at a rate of 10 cents per member, for insuring $5 a week in sickness, $30 at the death of a member, and $15 at the death of a member's wife. As an indication of the necessity for public education in matters of insurance and savings, I can not do better than quote the remarks from the " Massachusetts Labor Report for 1879," published in 1880, in which it was stated that "the great multitude of our workingmen, for whom almost nothing is done except by way of relief when they fall into distress," represent " the field to-day for the best work." Official reference is made to the subject in the annual report of the Massachusetts Insurance Department for this year, in which occurs the statement that ' ' the people are not satisfied with present developments or conditions, ' ' and facts seem conclusively to prove the increasing popularity of what are termed " Prudential," " In- dustrial," " Mutual Benefit," " Mutual Relief," " Co-operative," and other plans of insurance, some of the latter having no scien- tific basis or financial stability. Manifestly, the question of Industrial insurance was now act- ively before the public, and neither Insurance Commissioners nor the insurance press missed an opportunity to make reference to the increasing need for this form of insurance in all parts of the country. In the Insurance Times for April, 1879, I find a lengthy article on the subject, from which I make a brief quotation : There may be an attraction in placing policies for large amounts on the lives of persons who are likely to be prompt in the payment of premiums at considerable intervals. But if life insurance be a system benevolent in its spirit and beneficent in its workings, the prime object should be the diffusion of its blessings among the masses the good of the greatest number, not the great good of the few. No consideration of present trouble and vexation should stand in the way. Will it pay ? is the only practical and proper question as to any class or condition of life. Just as low in the scale of society as the effort can be made self -sustaining , should the insurance manager be willing to go. The last remark is especially significant. As I have pre- viously stated, Industrial insurance companies have never made V ' 112 HISTORY OF THE PRUDENTIAL. it their business to go low down in the scale of human beings for the purpose of placing their policies. This would not be desirable from a business standpoint as regards a profitable prog- ress, since the high mortality prevailing among the lowest poor is in itself a sufficient discouragement to their insurance ; but a still more serious disadvantage in transacting business among paupers, or the lowest poor, is that the requirements of the business for the continuance of the policies are not such as to make it possible to transact business among them on a profitable basis. It can not be too often pointed out that a distinction should be drawn between paupers and the poor or lowly, who still in their deepest poverty maintain a determined struggle for existence upwards and onwards towards a higher and a better life. It is something very considerably to the credit of the industrial population, or that large portion which work for small and often uncertain wages, that they have, nevertheless, within the limit of their means, if but for a single five-cent premium, made a provision on their own account against life's contingencies, and, as it has been so eloquently said by Mr. Dry den, " against a fate worse than death." For some curious reason the Insurance Times seems to have known very little of the progress of The Prudential even as late as April, 1879, for in a lengthy article on the subject, in which once more the value and importance of the system is pointed out, the editor concludes that ' ' The time is ripe for this great and beneficent undertaking. Some one will soon step for- ward to secure the profit, if not the laurel. The movement ought to be controlled by the large life insurance companies, whose abundant means, previous success and matured system would inspire confidence. They have the facilities for organizing a new clerical force, and for managing the details of the business in an economical way. Which of them will be the pioneer in America ? The company first in the field is sure of a great and profitable success. The moment it announces its intentions it will receive a God-speed from the newspaper and press generally, and from every true philanthropist. ' ' To these words of just appreciation of the necessity for Industrial insurance for the industrial population, the Insurance Times of April, 1879, adds some further comments, as to the probable results of the introduction of this form of insurance THE PRUDENTIAL INS. CO. OF AMERICA, l879~'8o. 113 into the United States, which subsequent events have fully justified : /O */v Now the industrial insurance will seize on this circumstance in the lives of the lowly. It will become a tie to bind a man to his family. He will not only feel that he is doing something beyond what the law will com- pel him to do, but he will be reminded month after month, or week after week, as the insurance man appears, that he is bound by a tie that will require more than ordinary selfishness to break. It is a silken tie, but one that may last for life. Nay ! It may be strong even when he sleeps in death. For he is rearing a monument of esteem and affection in the heart of his family that may have more real grandeur than a cenotaph of marble. What will be the effect of this increase of family affection ? Unques- tionably higher morals. There will be an additional motive to lead a good life. Home will become attractive. The tavern and bar-room will lose their attractions. The society of the family will be preferred to the society of the vicious. Those that have failed will be reclaimed. Those that are tempted may be confirmed in good purpose. This improvement in the social relations may cause, or it may be caused by another benefit of industrial insurance. The man will become more regular in his business habits, in the employment of his time. It will not require the mathematics of the actuary to demonstrate that the parties assured will, on the average, earn more difference in money than the amount of their premiums. The regularity of the instalment payments will tend to make men more methodical. What makes them more method- ical will improve their finances. The removal of anxious feeling as to the future welfare of their families will tend to make them more efficient. And they will not only earn more, but they will spend less on things of no account. Great philanthropists have often said that they had none the less money for their benevolence. Their habits of life are more productive. "Giving doth not impoverish." "There is he that scattereth and yet increaseth." Industrial insurance will, in a thousand ways, and by a thousand circumstances, acting and re-acting on each other, promote at the same moment the moral welfare of the assured and improve their pecuniary condition. The network of social relations, and of the various influences that affect individual mind and action, are so interwoven that the whole system grows and expands imperceptibly and inscrutably. "Touching one must strike the other, too." With the improvement in morals and in material interests will come the elevation of the man as a member of the body politic. He will not only be lifted higher in the scale of society, but in many cases the mere consumer will be converted into a producer. It would require no fertile pen to picture the public benefits of industrial insurance. The decrease of crime, the stoppage to a great extent of the drain necessary to provide the benevolent institutions required by destitution and infirmity, the saving to the State in the cost of maintaining its criminal jurisdiction and supporting its reformatory and penal establishments, the addition to its tax-paying population, the improvement of the public health, and the 114 HISTORY OK THE PRUDENTIAL. increase of longevity, are only some of the public benefits that will grow out of this beneficent system. These just and prophetic utterances were made by a writer familiar with the results which Industrial insurance had already achieved in England ; and it is not too much to say that seldom has prophecy been more fully realized than in the case of Indus- trial insurance to-day, from the workingrnan's standpoint, at least, the most satisfactory method of providing for the contin- gencies of life, and of securing widows and orphans against pauperism and want in many forms. The article from which I have quoted at length was no doubt largely instrumental in calling the attention of insurance companies to the increasing importance of Industrial insurance, and, in fact, the same number of the Insurance Times* contains a reference to the fact that several New York life-insurance companies were contemplating the adoption of the plan of Industrial insurance, while one, the Provident Savings Life As- surance Society, had actually organized an Industrial insurance department, under the supervision of an Knglish gentleman familiar with the methods of the British Prudential. The Provi- dent Savings was, therefore, the first of a number of regular Ordinary companies to follow the lead of The Prudential in trans- acting an Industrial business on the plan of the British Prudential. The Provident Savings, however, failed to recognize all of the essential principles, and seems never to have entered seriously and energetically upon the transaction of this form of insurance. The company never attempted to push this class of business even in the very beginning, and after a few years the Industrial branch was discontinued. Closely following the organization of an Industrial depart- ment on the part of the Provident Savings, came an attempt on the part of some of the officers of the New York Life, who had associated with themselves Mr. Bassett, the first President of The Prudential Friendly Society, for the purpose of organiz- ing the Industrial Insurance Company of the United States. The new company proposed to issue policies from ages one to seventy-five, and furnish insurance in sums ranging from $50 to * Insurance Times, April, 1879, p. 232. THE PRUDENTIAL INS. CO. OF AMERICA, l879~'8o. 115 $500 to the poorer classes, receiving the premiums in weekly or monthly instalments. The payments were to range from three cents to fifty cents a week, but, for reasons which can not now be ascertained, the company did not assume a corporate existence, although an effort seems to have been made to organ- ize the same on a substantial basis. Both Mr. Beers and Mr. Franklin, as officers of the New York Life, were among the incorporators, but it would appear that the effort was only a half- hearted one, probably due more to Mr. Bassett's influence than to a strong inclination on the part of the officers of the New York lyife. In making reference to this effort to organize a new Industrial company, the Spectator, in its October issue of 1879, referred to The Prudential and the results which had been accom- plished as follows : The Prudential, of Newark, has been extremely successful thus far, and we have no doubt but the application of the same principle to a more extended field will meet with equal success. It is but justice to state, in this connection, that The Prudential, of Newark, is largely indebted to its Secretary, John F. Dry den, for the success which it has realized. His ability and indefatigable industry have been incessantly devoted to the furtherance of this system of insurance, of which he was the original promoter in this country. Having been so successful in New Jersey, the Company is about to commence business in New York State. Before I deal with the extension of the business of The Prudential to other States than New Jersey, I must briefly notice an effort to establish an Industrial insurance company in Massachusetts, by the John Hancock Mutual I4fe Insurance / Company of Boston, which, as has been stated, had commenced the issue of monthly policies on what it called The Prudential plan, as far back as January, 1878 ; but it was in this year, in August, 1879, that it commenced the issue of regular Industrial policies on the weekly -premium payment plan, identi- cal in most respects with the methods and practice adopted by The Prudential of Newark, after the model of the Prudential of England. This effort on the part of the John Hancock proved a success, and the company is to-day the third largest Industrial insurance company in this country. At the same time that the Provident Savings and the John Hancock were making efforts to extend Industrial insurance, another large company had had the question under consideration n6 HISTORY OF THE PRUDENTIAL. for some time, and seems to have been actively engaged in the study of Industrial insurance in England through its president, who, immediately upon his return, took steps to organize an Industrial branch, out of which in time developed the largest Industrial insurance company of America, The Metropolitan Life Insurance Company of New York. The first Industrial policy of the Metropolitan was issued on the 1 7th of November, 1879, or just four years after The Pruden- tial had commenced actual business operations, on the loth day of the same month in 1875. Thus, by the close of the year there were four companies actively engaged in the business of Industrial insurance, and it may be of more than passing interest to give the results accomplished, as shown by the returns of the business in force December 31, 1879 : INDUSTRIAL INSURANCE IN THE UNITED STATES. 1879. No. AMOUNT. AVERAGE POLICY. 47 7ic $3. 866 012. oo $88 00 Provident Savings, John Hancock, i,947 9 227 258,033 oo 05 1 ooo oo 133 oo IO2 OO Metropolitan, c 142 516 618 oo IOO OO Total 60,132 $5,592,564 oo $93 oo This table shows that there were in force in 1879 in The Prudential 43,715 policies, while the four companies together had over 60,000 policies in force. While only four companies are included in the above table, there was still another, The Germania Life Insurance Company of New York, which also during the month of November * had commenced the transaction of an Industrial business, but for which the returns are not available for the end of the calendar year, 1879. Thus by January i, 1880, five companies were in the field, and the history of Industrial insurance thereafter is no longer exclusively the history of The Prudential Insurance Company. * By a curious coincidence the first Industrial policy of the Germania was also issued on the i7th of November, 1879. THE PRUDENTIAL INS. CO. OF AMERICA, iyQ-o. 1 17 The object of Mr. Dry den's efforts had been accomplished : Industrial insurance had been proven a success, the business had been established 011 a substantial and scientific basis, and all the companies which followed The Prudential fol- lowed its lead in placing the Industrial business on a sound financial foundation, and for this reason there has never been a single failure of a legitimate Industrial insurance company in the United States. To this is due the fact, in marked con- trast to the history of the thousands of attempts at pseudo- insurance transacted under various names, that not a single dollar has ever been lost to a policy-holder in an Industrial company on account of financial insolvency, or the shameful betrayal of a sacred trust. Near the close of the year 1879 The Prudential had taken steps to increase its capital to $100,000, to provide the necessary deposit to enter the State of New York. Men of exceptional ability had been induced to enter the service of the Company and, among others, Mr. John F. Collins, who had been the Secretary of the Republic L/ife of Chicago, was placed in charge of the Company's business in Philadelphia, while Mr. George H. Thornton, ex- President of the John Hancock Mutual Life, was given charge of the office of the Company in the city of New York. The Philadelphia Underwriter, in making mention of the extension of the operations of the Company, referred to the opening of an office in Philadelphia, stating that ' ' We trust that under the lead of the efficient gentlemen and their coadju- tors, who now direct the affairs of the Company, its career may be, over a large extent of territory, as nobly efficient as it has been in Newark and vicinity. ' ' The Insurance Monitor, in November, 1879, in referring to the admission of The Prudential to the State of New York, referred to the Company as follows : The Prudential Life Insurance Company of New Jersey has been admitted to the State of New York, and has taken offices in the Astor House, where the headquarters of the company will henceforth be. This institution has been, for several years, quietly at work in New Jersey, and the amount of business which it has placed upon its books is something amazing. It is the first practical illustration of what can be done in prudential life insurance that has yet been furnished by an American institution, and we shall look with great interest for its future develop- ment. Il8 HISTORY OF THE PRUDENTIAL. Before the Company had been admitted to the State of New York its affairs had been thoroughly investigated under the direction of the Secretary of the State of New Jersey, by so high an actuarial authority as Mr. David Parks Fackler. I quote from the Spectator of November, 1879, a brief statement in reference to this examination : Recently the stockholders of the company paid in an additional $100,000, and now propose, as soon as the details are arranged, to prosecute business in the States of New York and Pennsylvania. The sum of $100,000 has been deposited with the New Jersey State Treasurer, and, at the request of the company, its affairs have been thoroughly investigated, Secretary of State Kelsey employing D. P. Fackler, the well-known insurance actuary, to value its liabilities and to critically examine not only the assets of the company, but its methods of doing business. The reports upon both heads are exceedingly complimentary to the management of the company. The Prudential is conducted upon precisely the same plan as the Prudential of London, one of the largest and wealthiest life companies in the old country. Hundreds of instances might be mentioned where a policy in The Prudential has saved the insured from being buried in a pauper's grave at the expense of the public. It will be seen that the purposes of the company are beneficent in the highest degree, and we have no doubt but it will meet with continued success in its enlarged sphere of usefulness. As has been stated, by the first of January, 1880, The Pru- dential had 43,715 policies in force, for a sum of $5,866,913 of insurance protection. From the beginning the Company had acted upon a principle, from which it has never deviated during the course of more than a quarter of a century of Prudential history, and I can not do better than quote Mr. Dry den's views on this point, from the annual letter to the field force, dated January 2, 1900, in which I find reiterated what had so often been expressed in earlier official communications : ' ' By word and pen we have made it known that The Prudential seeks only to surpass its own record." This policy of conservatism and prudence has char- acterized the development of the Company from the date the first policy was written, on November 10, 1875, and how early and fully this policy was appreciated by the public is indicated by a statement in the Insurance World of 1880 : That the subject of industrial insurance has been so much neglected in the light of its success elsewhere, is a source of considerable surprise. However, within the last couple of years the subject has received more THE PRUDENTIAL INS. CO. OF AMERICA, l879~'8o. 119 favorable attention. A few of the regular life companies have been push- ing an industrial branch with a reasonable amount of success, whilst one company, The Prudential, of Newark, has been making a specialty of this class of insurance, and by not endeavoring to do too much at once, but to cover thoroughly each field as it slowly extends its operations, bids fair in a few years to become a household word with our working classes. This prediction on the part of the Insurance World has been more than fulfilled during the later years of Prudential history, and it is not too much to say, without vanity or vainglorious pride, that the name of The Prudential and its motto, "The Prudential has the strength of Gibraltar," are to-day household words in America from Maine to Cali- fornia. By 1880 the subject of Industrial insurance had attracted sufficient attention to receive special consideration in the annual report of the Massachusetts Insurance Commissioner. The Com- missioner called the attention of the Legislature to the successful introduction of the system by several companies authorized to transact business in Massachusetts, stating that ' ' Though somewhat experimental in its present stage of development in this country, its success has thus far exceeded all expectation. Being especially adapted to the poor and laboring classes, its material and timely relief, so promptly furnished in seasons of pressing need, is proving itself a welcome boon to multitudes of grateful beneficiaries. ' ' However, a weak point was referred to by the Commissioner, which, though fully provided for by the managers of The Prudential, seemed to require legislative action. In the words of the Commissioner, "The present laws of the State fail to provide a proper standard of reserve for this plan of insurance, a very large portion of its policies not coming within the rules of valuation applicable to other insurance." With this end in view, a bill to regulate the busi- ness had been introduced into the Legislature, but failed of passage ; but, as far as The Prudential was concerned, it had from the beginning provided an adequate reserve for all its policies, and this practice has been rigorously adhered to up to the present time. One important point had been gained, however, and that was that by 1880, after a little more than four years of actual business operations on the part of The Prudential, the business had increased sufficiently in extent to be officially 120 HISTORY OF THE PRUDENTIAL. recognized as a distinct branch of legitimate life-insurance prac- tice. One other problem, however, had attracted the attention of the Insurance Commissioner, as a serious question confronting the Company, and that was the valuation of policies on the lives of persons under ten years of age. In a special report on the subject, the Deputy Commissioner of Insurance of Massachusetts, under date of August 30, 1880, stated that " In attempting to apply the provisions of the general insurance laws to the regulation of the business of Infant Prudential Insurance,* we are met at the outset with the fact that for the valuation of such policies no standard is either fixed or provided for, and therefore, so far as the general law is concerned, the inference might be that this form of policy is not recognized as a life-insurance contract, but the charters of the companies operating this plan of insurance empower them ' to do insurance upon lives ' without reference to ages, and thus place beyond question the legitimacy of the business. ' ' The value of this official reference to Industrial insurance lies in the fact that, according to the highest authority on insur- ance interests, the insurance of persons of young ages was fully as legitimate as the insurance of adults. The essential point in- volved was that the so-called infantile policies were policies on per- sons under the age of say thirteen, and no reserve was required, since the mortality at the younger ages diminishes constantly from age o until ages 13 to 15 are reached. After this age the * The term " Infant Prudential Insurance " is a misnomer and equally misleading with another frequent expression, viz., "Child Life Insurance." There is no such business as " Child Insurance," per se, since not a single company confines its operations exclusively to the insurance of children, and the expression has no more justification than there would be in speak- ing of " Wife Insurance " because the companies, as part of their regular business, accept risks on women as well as on men. The term ''Child Insurance" or "Child Insurance Companies" has of late years been fre- quently employed by opponents to this system of insurance, for the delib- erate purpose of misleading the public into the belief that the Industrial companies make a specialty of, or confine their operations exclusively to, the insurance of children under the age of thirteen. As a matter of fact, the proportion of children insured with the large companies is practically identical with the normal proportion of persons under the age of thirteen in the United States. In The Prudential the proportion of deaths at ages one to fifteen, during the period i89i-'98, was 23.4 per cent, against a propor- tion of 26.9 per cent, for the city of New York. THE PRUDENTIAL INS. CO. OF AMERICA, l879~'8o. 121 mortality gradually increases to the oldest attainable age, and to adjust this factor in an equitable manner The Prudential from the beginning had followed the practice of the English Prudential Assurance Company, and had devised a table by which the pre- miums remained level while the amounts payable at death increased from age i to age 13, after which the amounts remained the same for life, subject in later years to increased benefits or dividends, or surrender-value privileges, as the case might be. To illustrate this point, I reproduce in full the first infantile table used in the United States by The Prudential Insurance Company of America : FIRST INFANTILE RATE TABLE USED BY THE PRUDENTIAL. TABLE OF BENEFITS PAYABLE FOR 3 CENTS A WEEK. No HIGHER PREMIUM CAN BE TAKEN. (Benefit payable if child dies after three months and within one year after policy has been issued.) AGK LAST BIRTHDAY WHEN POLICY WAS ISSUED. BENEFITS PAYABLE IF CHILD DIES AFTER THE POLICY HAS BEEN ISSUED. i 2 3 4 5 6 7 8 9 10 ii 12 For 3 months $10 II 12 14 17 20 25 30 35 40 c $11 12 13 16 19 23 28 34 40 % $12 *3 15 18 22 2? 33 40 50 60 $13 14 17 21 26 32 40 So 60 $14 15 20 25 32 40 49 60 $15 18 24 30 39 49 60 $18 22 29 38 48 60 $21 28 37 48 60 $25 35 47 60 $33 46 60 $45 60 $60 i year, 2 vears 3 4 6 8 10 ... ii This table, according to Mr. Dry den, in a statement made before the Massachusetts I/egislature in 1895, was the only infantile table used by the Company for eight years, but at the expiration of that period it was found, ' ' after carefully testing 122 HISTORY OF THE PRUDENTIAL. the matter, ' ' that the laboring man needed more insurance for his children, and that higher premiums would have to be accepted to meet the needs and wants of the industrial masses ; and with this end in view tables were prepared on which five- and ten-cent premiums were accepted, though the general plan and arrangement of the table were not changed, being the same in theory as well as in practice at the present day. The entire subject of Industrial insurance, with special reference to valuations and reserves, was referred to a special committee of Insurance Commissioners, who in their report recommended that ' ' for the purpose of computing reserves on policies issued at the ages under twelve years the valuations should be as for renewable term policies, no charge being made for reserve upon policies running on weekly or monthly premi- ums, ' ' and, further, that ' ' policies issued upon the plan set forth for sums under $500 of insurance shall not be held subject to the provisions of non-forfeiture acts, because of the almost infinitesimal amount of the benefit thereunder ; or to such laws as require notice of the falling due of premiums to be sent to the policy-holder, as the frequency of these payments makes the labor and expense of such notices impracticable." In consequence of these recommendations, by October, 1880, Industrial insurance had a recognized standing before the Insur- ance. Commissioners of the different States, and a high sense of justice seems to have dictated the resolution that the many intri- cate problems resulting from the practice should be dealt with by the companies in their own way, in full confidence that the latter would deal equitably with their policy-holders, in the light of their own experience and in consequence of the increasing com- petition in the number of companies engaged in the business. As the business was extended, its technical side naturally received increasing attention. From the beginning, serious at- tention had been given to one of the most important questions with which The Prudential has had to deal, and which even at the present time represents one of the most complex problems in Industrial insurance, namely, the question of forfeiture of benefits on contracts which have been voluntarily surrendered by the insured. As has been stated, the Committee of the Insurance Commission Convention had recommended that Indus- trial policies should not be subject to non-forfeiture laws, since THE PRUDENTIAL INS. CO. OF AMERICA, iyQ-o. 123 the small amounts at risk would not warrant the application of non-forfeiture principles to Industrial policies ; neither was there need for legislation on the subject, since the companies engaged in the business, acting on competent actuarial advice, had done what they could to prevent the lapsing of policies, first, by holding agents personally responsible for such lapses,* and, second, by giving to lapsed policy-holders not only a period of grace of four weeks, but every opportunity to revive lapsed policies with- out fines or other expense, and subject only to an examination or evidence of the health of the applicant at the time of reinstate- ment, to the effect that applicant was not an impaired risk. The Prudential, however, early recognized the need of energetic action in reference to lapsed policy-holders, and during the early part of 1880 issued a circular letter, which was sent to policy-holders in default or arrears for premiums : [ FORM No. 146 ] THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1880. M Polic No. This is to notify you that I called this day to collect your Premiums now weeks in arrears. Unless the same are paid when I call again, on next, the rules of the Company will compel me to lapse your Policy. Very respectfully, Agent. * Agents are paid a commission for writing new insurances, but only in case an actual increase is made in the weekly collectible premiums. Thus, if an agent lapses two policies for, say, twenty cents of weekly premiums, and writes three new policies for thirty-five cents weekly premiums, he will be paid a commission on only fifteen cents of new premiums. By this method it is vitally to the interest of every agent to keep every policy in force, since every lapse represents a direct financial loss. 124 HISTORY OF THE PRUDENTIAL. Should a policy have lapsed regardless of this notice of warn- ing, a further notice was sent to the lapsed policy-holder, offer- ing an opportunity for revival of the same without loss or cost to the insured, provided the same was in good health at the time application for revival was made : NEWARK, 1880. I have to inform you that our Agent reports the premium on the above Polic as last paid for the day of 1880, and the Polic ha therefore been lapsed. A lapsed Policy may be revived upon paying the premiums in arrears, and furnishing satisfactory evidence of the good health of the person upon whose life the Policy was issued. Unless a lapsed Policy is so revived, all benefit under the same is for- feited. Should you wish to continue the insurance, please take this card and your Premium Receipt Book to the Agent (or bring them to this office), and pay the premium. I remain, very truly yours, JOHN F. DRYDEN, Secretary. It is thus quite clear that the Company made every reason- able effort to keep the insured from lapsing his policy, or, if such lapse had taken place, to induce the lapsed policy-holder to revive the policy by payment of arrears. It is easy, of course, to find fault with this perhaps somewhat crude arrangement, but it was the best that could be made at the time without placing in jeop- ardy the interests of persistent policy-holders, the consideration of whom must always outweigh that of those who, for some reason or other, default in their contract obligations. What was true of the lapse question was equally true of the question of granting partial immediate benefits. On an Indus- trial policy only a single week's premium had been paid to secure the policy, and since, in view of this fact, a single five- or ten-cent premium made the Company responsible for a con- siderable sum, it had been at first the practice to deduct, in case of death, the unpaid part of the annual premium, computed on the basis of fifty-two weekly premiums payable during the year. This practice had not been satisfactory to the insured, and the general provision in adult policies was that, of the sum THE PRUDENTIAL INS. CO. OF AMERICA, l879~'8o. 125 insured for under the policy, no benefit should be payable if death occurred during the first three calendar months following the date of issue of the policy, one-fourth of the amount if death occurred after three calendar months and within six calendar months, one-half of the sum insured for was payable if death occurred after six calendar months and within one year, while the full amount of the policy was not due until the policy had been in force one complete year. This precaution was justified and made necessary by the fact that no medical examination was required on policies for sums of less than $200, while only a super- ficial medical examination was required for sums above that amount. No doubt, in consequence of increasing competition, The Prudential found it necessary, during January, 1880, to change this plan and grant immediate benefit for one-half the amount stated on the face of the policy : NEWARK, N. J., January 23, 1880. Dear Sir : By virtue of a resolution this day passed by the Board of Directors, all Adult Policies hereafter issued by this Company will be placed in immediate benefit for one-half the amount stated on the face of the Policy. All Infantile Policies will also be put into immediate benefit from day of issue, instead of at the expiration of three months as heretofore. You are authorized to inform the members in your Agency that the Company will, without expense to the insured, if desired, issue a new policy containing the stipulation above set forth, upon the policy being forwarded to this office for cancellation. If the member prefers to retain the policy already issued, the Com- pany will treat Adult Policies as in one-third benefit for the first six months and two-thirds benefit the last six months of the first year. Infantile Policies already issued will also be treated as in immediate benefit. I trust this action of the Board of Directors will be another evidence to you that THE PRUDENTIAL, while it is determined to take no hazardous step, will strive to deal with its members in a spirit of the utmost liberality consistent with safety. JOHN F. DRYDEN, Secretary. This concession to the policy-holders was doubtless prompted by the increasing competition and consequent excessive rivalry among the agents. The business was new and, as regards adverse selection, much had yet to be learned. For a time the more 126 HISTORY OF THE PRUDENTIAL. K liberal benefit provisions prevailed, but subsequent experience proved that a somewhat more restrictive policy was necessary for the protection of the Company and its policy-holders. Partly in response to increasing competition, largely because of an increasing demand, The Prudential in 1880 commenced the issue of a new form of Industrial policy for the round sum of $500, with premiums differently adjusted, but payable on the weekly plan. A copy of this table is given below, together with the explanatory statement that, in case of death during the first policy year, one-half of the amount was payable, while the full amount was payable after the policy had been in force a complete year : FIVE-HUNDRED-DOLLAR ADULT POLICY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. AGE NEXT BIRTHDAY. WEEKLY PREMIUMS. AGE NEXT BIRTHDAY. WEEKLY PREMIUMS. 20 $0.24 43 $'5 21 25 44 52 22 .26 45 55 23 .26 46 57 24 .27 47 .60 8 !28 .29 48 49 50 .62 2 28 30 51 7 29 31 52 74 30 32 53 77 31 33 54 .80 32 33 34 35 a .84 .88 34 35 36 36 ii a 59 2 .01 37 .40 60 .08 38 .41 61 15 39 .42 62 .22 40 44 63 .28 .46 64 35 42 .48 65 47 One-half benefit first year and full benefit after one year. NOAH F. BLANCHARD, President. JOHN F. DRYDEN, Secretary. THE PRUDENTIAL INS. CO. OF AMERICA, l879~'8o. 127 This table was a decided boon for employees or wage- earners of a higher grade, engaged in remunerative industrial occupations, since it made possible insurance on the plan of weekly payments, combined with the collection of the pre- mium from the house of the insured, for sums as high as $1,000, for men who, on account of their occupation or for other reasons, were not likely to obtain insurance with Ordinary companies. It was also the first step in the direction of what in later years became known as Industrial-Ordinary insurance. It was a first step in that slow and difficult process of insur- ance education of the masses, through the medium and methods of Industrial insurance. With the growth of the business, the legal aspect of Indus- trial insurance, the relation of the Company to its policy-holders, the opportunities for misunderstanding and misconstruction of policy terms, as well as the occasional instances of fraudulent practices on the part of agents and policy-holders, made it neces- sary that the law department of the Company should be reorgan- ized on a more satisfactory basis, and accordingly Mr. Edgar B. Ward, since 1875 a Director and since 1876 the Attorney of the Company, was this year, under date of February gth, elected Counsel and, subsequently, Second Vice-President. It is largely due to Mr. Ward's efforts that the Company has had few legal difficulties, few contested claims and practically no important lawsuits. As a member of the Finance Committee Mr. Ward has given much of his time and devoted much of his ability to the investments of the Company during the past twenty years, and the financial interests of The Prudential have been so ably protected that no life company can boast of a better record of safe and remunerative investments than The Prudential Insur- ance Company of America. The Company's proud claim to ' ' The Strength of Gibraltar ' ' has its foundation in the con- servative manner in which its finances have been managed, and it is but proper that full credit should be given to Mr. Kdgar B. Ward, as one of the founders of Industrial insurance in America. The question of life insurance for children for small sums sufficient to pay the funeral expenses, and to provide for the cost of the last illness, received public consideration this year not only in the insurance press, but in many of the newspapers of the 128 HISTORY OF THE PRUDENTIAL. period.* I can not do better than quote from the Weekly Under- writer of July 24, 1880, an article on this subject of exceptional interest : We have noticed recently, in several journals, an implied doubt of the propriety of permitting the practice of that part of industrial life insurance which deals with the infantile population, and a case is cited, in Baltimore we believe, where there were suspicions of infanticide in connection with the death of a child insured in one of these companies. Experience makes sad work of our theories sometimes, and the theory that murder will be committed on helpless babes for the small sums for which they are insured has no basis of fact to sustain it. We might fairly go further, and say that aside from the facts there is no reason to believe that the natural love of parent for child, which beats as strongly under the coarser vest as under the costliest, can be stifled and changed to a criminal action for a sum of money which, at best, merely provides a decent funeral for the dead child. It must be understood that industrial policies average less than one hundred dollars and that in the case of infants, or children under four years, they do not exceed one-fifth of that sum, and that they are guarded against criminal intent in their inception by very materially limiting the benefits under them, for a number of months. The parents who would murder a child for the insurance would murder it to avoid the burden of supporting it, the lifting of which would prove a far greater relief than the receipt of ten or fifteen dollars of insurance money. Opinions, however, * An earlier attack on the practice of insuring the lives of young chil- dren had been made in the Trenton True American under date of March 26, 1878, on the basis of an article in the Pall Mall Gazette in which charges- of child murder and neglect for insurance money had been made in the usual manner without evidence or instances of authenticated facts. In com- menting on the article the True American said : " Such a paragraph as this almost destroys one's faith in human nature. It is difficult to conceive the deep depravity to which the facts commented upon bear witness. But since it does exist, it seems to us that the Courts should prevent its accomplishing its purpose by holding all policies of insurance obtained by parents on the lives of their children invalid, as. against good morals and public policy. It is not only the inducement which inhuman parents, devoid even of that instinct which leads the brute creation to care for its young, find in insurance on their children to ill- treat them or put them out of the way, but it is the tendency to cause them to neglect their children in their sickness, and, moreover, the demoralizing effect produced by parents speculating on the lives of their children. The insurance of children by parents is a reversal of the entire object of life insurance, it ought to be forbidden by law, and the Courts should stamp it out as a dangerous incentive to crime." (Trenton True American , March 26, 1878.) THE PRUDENTIAL INS. CO. OF AMERICA, iyg-o. 129 are of very little use in the presence of statistics, and, fortunately, we are not compelled to rely upon opinion in this case. This same charge was brought against the business by the Friendly Societies Commissioners in England, who, commenting on the report of a select committee of the House of Commons, state they " can not agree with the opinion expressed by the House of Commons committee, that the instances of child murder with a view of obtaining money from a burial society are very few." The Committee of Management of the Royal Liver Friendly Society, one of the largest of these societies we believe with the exception of the Prudential the largest immediately on becoming aware of these opinions expressed by the commissioners, resolved to make a complete investigation of their experience, which was done under the direction of Mr. Sprague, the eminent English actuary. His report, made in 1875, is before us with the figures, giving that society's experience, the observations covering 122,696 lives. His deduction from the figures is : "An examination of these figures proves conclusively that the sus- picions of the commissioners are unfounded as regards the children insured with the Royal Liver Society. If any appreciable number of such children, residing, for example, in Liverpool, were destroyed by their parents or other persons in charge of them, for the sake of obtaining the insurance money, it is clear that the mortality among the children whose lives were insured in the Liverpool district would exceed that among the children belonging to the general population of Liverpool. But instead of this the exact contrary is the case. The rate of mortality among the insured children is very greatly less. ' ' Mr. Sprague's testimony, or rather the testimony of his figures, does not stand alone. Any person who reads the history of the Prudential Assurance Company can not accuse its manager, Mr. Henry Harben, of carelessness in arriving at conclusions. Every step in the progress of that company has been marked by the most painstaking care and the most laborious study. In recording its experiences on infant lives, Mr. Harben says : "The records of the policies issued under this table have been most carefully observed, and while the numbers of lives admitted are counted by millions, the experience of the company completely negatives the idea that malfeasance generally is practiced, for in the twenty years during which the practice of infantile assurance has been carried on, no such case has been known to have occurred, and only two in which the circumstances were of a distinctly suspicious character." This would seem to close the case as far as the business in Great Britain is concerned. It may fairly be presumed that the companies engaged in industrial insurance in the United States have given this subject some thought before engaging in it. Certainly, all the arguments for the views of those who consider infantile insurance provocative of murder are stronger in England than in the United States. Among our population children are not felt to be the burden they are in more crowded communities. We have not yet arrived, as England has, at a point where 130 HISTORY OF THE PRUDENTIAL. a restriction of the birth-rate is discussed as a question of moment. Oppor- tunities for parents to become proud of their children are more plentiful here than in Europe. If, then, we find as an actual fact that no such calamity as child murder follows infantile insurance among the crowded and squalid popula- tion of London and Liverpool and Birmingham, there is little reason to apprehend it in New York or Boston or Philadelphia; and no cause for doubting the wisdom of a scheme which promises the benefits of life insur- ance in small quantities to those who are unable to buy in large quantities. This plain statement of the merits of the case in the Weekly Underwriter is deserving of the most serious consideration on the part of those who would find fault with the practice of Industrial insurance companies in accepting risks on the lives of young children for small amounts. The Prudential had, from the beginning, carefully observed the local conditions affecting the business, with special reference to that part or branch which concerned the insurance of children at young ages, and by 1880 it was demonstrated, by the vital statistics of the city of Newark, that instead of there having been an increase in the mortality of children since the commencement of Industrial insurance, there had actually been a material decrease, so much so that, while the number of deaths at ages one to nine, inclusive, had been 1,058 during 1876, there had been 934 deaths during 1877, 722 deaths during 1878, 618 deaths during 1879, and only 520 deaths during 1880. This was in a city where The Prudential had transacted the larger part of its business, and where a con- siderable number of children over the age of one had been insured. From that day to this the mortality of children, not only in the city of Newark, but in all the cities in the State of New Jersey where Industrial insurance is transacted, has materially decreased. It certainly stands to reason that if the insurance of children had exerted an unfavorable influence on the duration of child life this considerable decrease in the mortality would have been impossi- ble in a State where, at the present time, the larger portion of the child population is insured in Industrial companies. The subject has received further attention during later years, and will be referred to again in its proper place. By slow degrees the opinion of the insurance journals and intelligent public opinion in general changed to a uniform ap- proval of the system of Industrial insurance. It was becoming apparent that the new form of life insurance was unlikely to prove THE PRUDENTIAL INS. CO. OF AMERICA, l879~'8o. 131 a dangerous element as regards the mortality of children, or an undesirable factor in competition with Ordinary companies, but rather, to the contrary, it was evident that the general diffusion of insurance knowledge and principles among the masses was likely to increase very materially the general demand for life insurance on the Ordinary plan. A very clear and comprehensive view of the matter is to be found in an article in the Insurance Times for March, 1880, from which I quote : In this way a poor man may provide an adequate burial fund for a mem- ber of his family, which the companies agree to pay almost at once. They have a paid-up capital, and an accumulated surplus, giving security to every one. How widely such companies differ from the loose co-operative companies, will be evident to the most casual observer. The Prudential complies with the law, makes a lawful contract, and engages to fulfill its contract according to law. It has capital to fall back upon, and voluntarily submits to all the conditions which the law imposes. On the other hand, the co-operative companies are a law unto themselves, and they submit to no other law. They have no legal contract to bind them ; and if they please to pay, they pay ; and if they do not please to pay, they keep the funds that have been committed to them. Any Prudential company is better than such rotten associations as these. Happy will it be for the States if the Prudential companies should drive the co-operative companies out of the country. How far the Industrial insurance companies succeeded in counteracting the evil of the increasing number of assessment insurance societies, it is as yet too difficult to state, for, not only are the statistics of fraternal insurance incomplete and largely misleading, but the subtle evil which underlies these institutions has become too widely disseminated to become easily eradicated. It may with perfect truth be stated of those who originated and promoted the thousands of so-called fraternal or mutual-benefit aid societies, as Dr. Hodgkin once said of certain English Friendly Societies in a little volume on "Health," published in 1841, that ' ' whilst none but an accomplished mathematician would think of producing an almanac in which astronomical predictions should be given, almost any set of men, who withdraw from the tap-room to the comparatively quiet parlour of an inn, seem to think themselves qualified, with the assistance of the landlord's arithmetic, to devise the plan of a Benefit Society." It is the plain truth that the majority of benefit societies or secret orders containing in their charters an insurance provision, or aim- ing at the transaction of an insurance business, have been founded 132 HISTORY OF THE PRUDENTIAL. by men ignorant of, or indifferent to, the principles of life insur- ance, the elements of finance and the law of human mortality on which the business is founded. However much Industrial insurance, as practiced by The Prudential, may have fallen short in meeting the needs and wants of the industrial population, it has at least accomplished one of the principal objects for which it was organized : it has paid the claims which have matured, and the companies will always be able to meet their obligations, founded, as they are, on scientific- ally constructed tables of mortality and finance. No Industrial insurance company in this country has ever failed and none is ever likely to fail, except on account of possible dishonesty, which must be taken into account in all financial operations ; but the companies can never fail on account of inherent weakness, false principles, or erroneous practice, in view of the soundness of the basis on which the business rests. I have previously pointed out that by November, 1879, the Metropolitan L,ife Insurance Company of New York had also com- menced the transaction of Industrial insurance. Contrary to the course followed by The Prudential, the Metropolitan imported a large number of superintendents, assistants and agents from Kngland, and at once extended its operations over a large num- ber of the States, making possible the more rapid extension of the business, which gave the company a lead which it has main- tained up to the present time. The Metropolitan had for many years transacted an Ordinary business, had a large capital, a well- equipped office force and local offices in many parts of the country, enabling it, with the assistance of a large number of men expe- rienced in the Industrial business, to at once take the position of numerical leadership, which it has successfully maintained for the past twenty years. During the year 1880 The Prudential had continued to make considerable progress, and by December 31, 1880, there were 87,462 policies in force for the sum of $7,347,892. Of this sum the larger proportion was confined to the State of New Jersey, the operations in New York and Pennsylvania being as yet very limited in extent. The results obtained were satis- factory to the Company, which even at this early date followed its maxim to be satisfied with an improvement from year to year of its own previous record. THE PRUDENTIAL INS. CO. OF AMERICA, l88l-'84. 133 CHAPTER IX. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, 1881-1884. During the early stages of all commercial development, excessive and often unfair competition is inevitable. Men anxious to succeed in any given direction, partly ignorant of the means and largely ignorant of attainable results, will ever and again fall short, and give undue weight to factors and ele- ments of least importance, and but small attention to factors and elements of most importance. Nations, as well as individu- als and corporations, will enter into war with each other, which, but for a saving remnant of common sense, would often prove mutually destructive. With a field open to all, and with bound- less opportunities, men and companies, during the early days of Industrial insurance, struggled more against each other than they struggled for the essential interests of each and all, Indus- trial insurance companies, no more than Ordinary insurance companies or fraternal societies, or business enterprises of any kind ; but it is something considerably to the credit of The Prudential that, from the first, it never concerned itself with the success or efforts of other companies, being satisfied to attain its own place in the business world in its own way. In the beginning it discouraged agents from methods of unfair competition, from making attacks on other companies and other methods of insurance, and to this policy it has remained faithful up to the present time. For a number of years, however, the Company was drawn into the vortex of a competitive struggle, which did not come to an end until about 1884. As an evidence of the increasing local approval of the Company and its methods, I quote the following extract from the Sunday Call of December 18, 1881 : To say at^-thing in this city in praise of The Prudential Insurance Company, whose office is at No. 215 Market street, is like "carrying coals to Newcastle." 134 HISTORY OF THE PRUDENTIAL. Everybody in Newark knows this company and knows its honorable record. It has paid so many claims here that it would probably be difficult to find a person in our industrial population who has not had come under his own personal observation the benefits derived from insuring in this company. Who is there in Newark who does not know of a relative or a friend whose necessities have, not thus been relieved in that saddest of all hours, when the dark shadow of death enters the door ? It is no wonder that the company has such a marvellous hold upon the confidence and good-will of our people. With more than 35,000 policies in force upon the lives of persons in Newark, who pay their premiums weekly to the agents of The Prudential with the regularity of clockwork, that company will continue to exercise a powerful influence over the social well-being of our people. Besides its fair record The Prudential has the prestige of being the first to introduce into this country the present and only plan of industrial insurance, which has proven a permanent success. In addition to this the company is sound, and is managed with tact, prudence, and in a spirit of fairness that makes the interests of its policy-holders safe. And, as further evidence of the increasing influence of the Company beyond the large cities of the State, I give an extract from the Metuchen Inquirer of October 20, 1881, as follows : The plan of insurance offered by The Prudential Insurance Company places insurance within the reach of all, rich or poor. For years the poor man was shut out completely from the benefits of life insurance. The establishment of The Prudential Insurance Company, of Newark, N. J., arose entirely from the necessity of giving the poor man some means of providing for those from whom death would separate him, and at a slight cost, payable in instalments, so arranged as to fall due weekly, and at a rate which brings the desired benefits within the reach of all, no matter how poor the man may be, who wishes to make such provision for the future. The company, by always paying the claims brought against it, has won the entire confidence of the public. No man can hesitate a moment to secure the means of providing a decent burial for himself or of a member of his family, or of leaving behind him means of supporting his dear ones, at so trifling a cost. Men, women and children, even infants of one year of age, can be insured in this model organization, and the weekly payments required are so small that any one can afford to pay them. Thousands take this means of securing themselves from receiving a pauper funeral. It, however, was not only from the local press that Industrial insurance received unqualified endorsement. Among others, the Superintendent of Insurance of the State of New York referred to the subject in his annual report for 1881 in the following manner : This class of insurance is somewhat new, and is yet an experiment in this country, but thus far it seems to meet with success which promises THE PRUDENTIAL INS. CO. OF AMERICA, l88l-'84. 135 well for its future growth and prosperity. Its scope and plan involve insurance on the lives of laboring men and their families for small sums ranging from a few dollars upwards, and the payment of premiums in weekly sums of a few cents. Success in this branch of business is only attainable by the issuance of a vast number of policies and their diffusion in the large cities among the masses of people. One company in New York, the Metropolitan, has issued, during the past year, more than two hundred thousand of these policies. As the ability of the class of people who take these policies depends entirely upon their steady employment, and upon their habits of prudence and economy, there are, naturally, numerous lapses, a number for which the average of the ordinary business is no proper criterion. The companies which appear to be successfully prosecuting this class of business have uniformly afforded every facility possible to enable the lapsed policies to be renewed again upon just and equitable terms, and, so far, there have been no complaints of policy- holders in that direction. But such companies may not always be in the hands of men who will be governed by these honorable principles, and the protection to which their policy-holders are equitably entitled should be made a matter of legal regulation. The law under which these companies act is the general life insurance law of the State. While this law does not^ prohibit the issuance of such policies, or the payment of premiums in these weekly sums, it is not believed that such a system was contemplated when the law was passed. It seems, therefore, that some provision should be adopted prescribing more particular regulations and requirements to this class of business. The superintendent seems to have fully recognized, the merits of the business, while at the same time conscious of technical diffi- culties, one of which, the question of reserves, has been previously dealt with. On the question of lapses he pointed out that forfeit- ures in Industrial insurance could not be compared with forfeit- ures in Ordinary insurance, for, as a moment's consideration will show, the policy-holder in an Ordinary company has, at the most, four chances to lapse his policy during the year, while the Indus- trial policy-holder has fifty-two chances to cancel his policy for some cause or other, and, again, while the policy-holder in an Ordinary company has usually paid at least one quarter's premium of some material consequence, the Industrial policy-holder will, in most cases, have paid nothing at all, or but a few dimes, for which he will have received from six to eight weeks of insurance protection. There was, however, no need for special legislation on the subject, for, as was well said by the Weekly Underwriter, "It does not follow, as a political axiom, that because a particular business has not been legislated upon, there- fore legislation is needed. There are a great many enterprises 136 HISTORY OF THE PRUDENTIAL. that succeed very well without special legislation, and Industrial insurance is fully as likely to succeed without legislation as with it." On one point, however, considerable difficulty was experi- enced on the part of The Prudential in entering the State of New York. It would seem that the authority of the Company to do business in the State of New York had not been renewed for 1 88 1, and that the Company had made no application for a license that year. In the Spectator for April, 1881, however, there is an article which would indicate the difficulty, in that it was purely a question of license fee which The Prudential's New York repre- sentative ought to pay. In the words of the Spectator : The laws of New York and New Jersey are reciprocal in effect. Indus- trial insurance is especially peculiar in the numerous solicitors required to conduct it successfully, each agent, as compared with Ordinary life-insur- ance representatives, handling a very small amount of money. And here is where the difficulty arose when the Company first entered the State. The Insurance Department at length determined, under recommendation of the Attorney-General, to construe Industrial superintendents and assist- ant superintendents of The Prudential in New York as corresponding with Ordinary life-insurance agents, and under the New Jersey law charged them $22 each for the State license fee. The New Jersey Legislature, at its last session, amended the license law by providing that agents and solicitors of Industrial companies should be taxed $2 each. Of course, this had a corresponding effect upon The Prudential's licenses in New York. But the New York Department goes further, and disregarding its previous decision, claims that $22 should be paid by each of the Company's solicitors for last year. The Prudential, of course, feels aggrieved, and is looking towards a more equitable arrangement that shah 1 recognize a difference be- tween its small army of solicitors and its superintendents of districts. The latter it is willing to pay for at the rate of $22 each, but to pay that sum for each solicitor would be a high price to pay for the privilege of doing business in the State. The Company has a large and growing busi- ness in New York, and will doubtless renew its power to continue business in any event. The point involved was a most serious one, since excessive license fees would very largely increase the expense-rate of the Company. The matter however was equitably adjusted and the Company resumed business. From the very beginning, as I have had more than one occa- sion to point out, the managers of The Prudential had given thoughtful consideration to the large number of technical ques- tions and problems which were constantly pressing for solution. THE PRUDENTIAL INS. CO. OF AMERICA, 1881-^84. 137 Reference has been made to the question of reserves, to the ques- tion of immediate benefit, to the insurance of children, to the surrender value of policies, etc., but during the early part of 1881 a new problem presented itself, which the Company dealt with, as in all other matters, solely on the basis of facts as they were avail- able for the purpose of aiding the Company in arriving at an equit- able decision. Thus far negroes had not been seriously considered as applicants for Industrial insurance, but with the increasing extent of the business the colored population had also become considerably interested in the subject, and was now in increasing numbers availing itself of this opportunity to provide for the contingencies of life. Careful investigations, including the Company's own experience, and data collected for a large num- ber of American cities, pointed to an excessive mortality among this element of the population, so much so that it became apparent that unless the Company adopted a restrictive course it would soon find itself in difiiculties because of inordinate losses experienced on this class of policy-holders. Under date of March loth, therefore, the Company issued a circular to superintendents and agents on the subject of colored risks, of which the following is a copy : NEWARK, N. J., March 10, 1881. To SUPERINTENDENTS AND AGENTS. The following changes will be made with respect to colored persons (Negroes), applying for assurance in this Company, under policies issued on and after the week commencing Monday, March 28, 1881. (This applies to all APPLICATIONS taken during the week commencing Monday, March 2ist.) 1. Under Adult Policies the sum assured will be ONE-THIRD less than now granted for the same weekly premium. 2. Under Infantile Policies the amount assured will be the same as now, but the weekly premium will be increased to FIVE CENTS. These changes are made in consequence of the excessive mortality pre- vailing in the class above named ; they do not apply to other persons. Policies issued prior to March 28th will not be affected by this regulation. Rate tables for use with Colored Applicants will be duly sent you. Agents using Infantile Applications in which the question of " Race" is not asked, should write on the lower margin on the back of the applica- tion the word "white" or " colored " as the case may be unless this is done the application will be returned for correction. JOHN F. DRYDEN, Secretary. '38 HISTORY OF THE PRUDENTIAL. The following is an abbreviated copy of the first rate table used for colored adult applications : ADULT RATE TABLE FOR COLORED RISKS. FIRST USED APRIL 4, 1881. WEEKLY PREMIUMS. AGES. FIVE CENTS. TEN CENTS. TWENTY-FlVE CENTS. FIFTY CENTS. 13 $78 oo 15 76 oo 20 68 oo $136 oo 25 60 oo 1 2O OO $300 oo 30 52 oo 104 oo 260 oo 35 45 oo 90 oo 225 oo 40 37 oo 74 oo 185 oo 45 30 oo 60 oo 150 oo $300 oo 50 24 oo 48 oo 120 00 240 oo g 19 oo 38 oo 30 oo 95 co 75 oo 190 oo 150 oo 65 22 OO 55 oo 70 40 oo This action on the part of The Prudential was fully justified by the available statistical information on the subject. Reference to any health report of a Southern or Northern city covering the years 1880-1881 will clearly prove that the general death-rate of the colored population was about 50 per cent, in excess of the death-rate of the white population. Thus, for instance, according to the health report for Savan- nah, Ga., the average annual death-rate of the white population was 38.6 per 1,000, while for the colored population the rate was 51.7 per i,ooo. For New Orleans the white rate had been 31.3 per i,ooo, against the colored rate of 40.2 per 1,000. For Mobile the white rate had been 24.6 per 1,000, against the colored rate of 39.7 per 1,000, and this difference in the mortality rate of the two races held true for all the other cities for which information was available. In view of these facts, taken in connection with the actual experience of the Company, the action of The Prudential was not only justified, but necessary for its own safety and in equity to the white policy-holders, who as a class are subject to a mortality less than two-thirds as high as the rate prevailing among THE PRUDENTIAL INS. CO. OF AMERICA, 1881-^84. 139 the colored population. The position assumed was, therefore, justified by the available facts, and the Company has not receded from this course, although, under laws since passed, life-insurance companies are now compelled in most of the States to grant equal benefits for the same premiums to both races, in defiance of the laws of mortality and ordinary business conduct. Since that date a large amount of information on the subject of negro mortality has been collected, but no subsequent investigation has proven that the Company's position in the matter was erroneous or unjustified or overcautious, and, while the Company at the present time accepts applications from negroes and issues policies without rating, it does not solicit this class of risks, and has, therefore, comparatively few colored persons as policy-holders on its books.* The question of expenses in conducting the business of Industrial insurance received due consideration, especially in the insurance journals of the period, largely in consequence of a suit of the British Prudential against the Western Provident, referred to at considerable length in the Insurance Monitor under date of September, 1881. During the trial of the case some very interesting evidence relative to the Industrial expense-rate was brought out in the examination of Mr. Arthur H. Bailey, the well- known actuary, who testified that the lapsed policies were a serious Jinancial loss to the Industrial companies, the more so in view of the fact that, since ''profit which the companies might have expected to make from the premiums payable in succeeding years would, of course, be lost in case of the lapse of the policy. ' ' In further explanation of this interesting point in life-insurance practice, I quote from the Spectator of September i, 1881, a contribution evidently from the pen of Mr. Dryden : There has, at one time or another, been a great deal of nonsense said about The Prudential and its system of insurance, by those who do not understand it. Nobody can suppose that a policy for $50, upon which pre- miums have to be collected at the member's house fifty-two times a year, can be taken care of at as low a rate of expense as a policy for $5,000, upon which the premium is payable but once annually, and that in advance. In * For a full discussion of the entire subject of negro mortality, see the writer's work on "The Race Traits and Tendencies of the American Negro," Macmillan & Co., New York, 1896. 140 HISTORY OF THE PRUDENTIAL. every branch of business the small buyer pays higher for his goods than the large one. It is an inevitable result of the laws of trade and commerce. Nevertheless, the poor man must buy in small quantities or he can not buy at all. The question is, Shall he be enabled to buy in such quantities as his limited means permit? Some years since, Henry Harben, the then Secretary of the [British] Prudential, read a paper upon his company before the Institute of Actuaries. At its close this very phase of the company's business came up. Such eminent actuaries as Messrs. Brown, Bailey, Walford, Sprague and others participated in the discussion, and there seemed to be no dissent from the views uttered by some of them, that the expense was entirely proper, was inseparable from the business, and that if the laboring man wanted exceptional privileges he must expect to pay for them. This is the true and sensible view to be taken of this matter. The suggestion of The Indicator, that insurance should be established and carried on by the co-operation of employers, has been again and again tried and proved a failure. No success can be obtained except through the aid of a well-organized and systematized agency department. The men employed for this work must be paid. Some years ago The Prudential made the experiment, in one of our large districts, of offering a rebate to those of its members who would go to the office and pay their premiums. The experiment was a failure and had to be abandoned. The effort of the government to introduce insurance among the working classes in England utterly failed. Managers of a company like The Prudential have every inducement to keep the expenses down to the lowest point possible, and we think it fair to assume they do so. We believe the Prudential has been an inestimable blessing to the workingmen of England, and that the com- panies engaged in the same line of business here will prove of like advan- tage to our people. J. F. D. The position taken by Mr. Dryden may be summed up in the statement that ' ' the expense was entirely proper and insepa- rable from the business, ' ' in view of the fact that the premiums had to be collected from the house of the insured, that the neces- sary supervision and auditing of amounts required a much larger amount of clerical labor, and that the general methods of con- ducting the business differed widely from the methods prevailing in Ordinary insurance, where each transaction required less labor and was subject to less expense than was the case in Industrial insurance. However much may be said on the question of expense, it is one which has never hindered the development of the business, it is one which has been subject to considerable modification, and which will undoubtedly be materially improved upon in the course THE PRUDENTIAL INS. CO. OF AMERICA, l88l-'84. 141 of the years, as the business becomes older and the agency staff becomes more permanent. It must be plain to any one familiar with the history of industrial progress, that a new business experiment like Indus- trial insurance was not likely to escape bitter antagonism and some decided opposition. Naturally, dissatisfied policy-holders and especially dissatisfied agents, as well as others opposed to the extension of Industrial insurance principles, were only too ready to supply newspapers with information or expressions of opinion adverse to the business, and among the first to give space to an open attack, with special reference to the lapse and expense-rates, was the Philadelphia Sunday Times, which, under date of June 26, 1 88 1, contained a lengthy discussion of some phases of Indus- trial insurance, which were ably answered in an article in the Weekly Underwriter of September 17, 1881, as follows: Whether or not so-called "Industrial" insurance will secure a per- manent foothold in the United States we regard as not yet settled, but we should be very sorry if, through the intemperate advocacy of its friends, or the ignorant assaults of its opponents, it failed to have its chance of success. We have contented ourselves with noting its progress, from time to time, with not sufficient knowledge of its internal workings to venture to pronounce a verdict upon it. But there are others, with even less knowledge than we possess, who are not so reticent. One of our daily exchanges has condemned it for its expenses, and the companies practicing it for the gains made from lapses or, in other words, for the sums taken from poor people, who get only a few weeks or months of temporary insur- ance for their money. The mistake must not be made of measuring the business in these two respects by the conditions which attach to ordinary life insurance. Industrial premiums are very properly loaded much heavier, and a business of thirty per cent, loading is no criterion for one of one hundred per cent. Nor are the lapses of a business among merchants, lawyers, ministers, etc., a proper standard for lapses among working people subject to every rise and fall of trade and everything affecting day wages. As a matter of fact, the lapses in this business are far more Likely to ruin the companies than the assured, and the enormous expenses are inseparable from a business which consists of house-to-house collection of nickels, and which is being rapidly extended. Our own fear has been, not that the poor people who pay the nickels would suffer, but that the com- panies engaged in an endeavor to collect them would endanger their capital. Every policy that lapses must be a loss to the company, and with an industrial class as shifting as is our own there must be many lapses. The problem for the underwriter who will be successful in industrial insur- ance is, it seems to us, to secure persistence in paying by the assured. That done, the way is easy. But a company only retaining at the close of the 142 HISTORY OF THE PRUDENTIAL. year a little more than one-half of the business of the year, can not be said to have solved it. Yet the Prudential of I/ondon, with eight millions of annual income, ample accumulations and a sufficient surplus, represents, in its five millions of present members, but one policy-holder retained for every three that have lapsed. Either the machinery is defective or there may be, in the nature of the people or their business, something which will necessitate still larger premiums than are now charged. If the trouble is in the machinery, the managers now in charge of the business will remedy it without unnecessary delay ; if it is in the people, they will probably sacrifice some capital before it is remedied. At any rate, we believe in giving them a fair chance to work out their problem, undeterred by fulsome flattery or ignorant criticism. The result is worth attaining \ and we have no doubt the means to attain it will be found. There is in this article the same clear conception of the busi- ness as brought out in Mr. Dry den's letter on the same subject in the Spectator of September ist. I have given space to these expressions of opinion on the part of qualified writers so as to bring out as clearly as possible the views of the companies engaged in the business. On the question of lapses the last word has not as yet been said, and, in fact, few arguments worthy of the name have found their way into public prints outside of the insurance publications. A moment's reflection will make it clear that many of the millions of so-called insurance represent only a bookkeeper's statement of business on which little or nothing had been paid, and, rather than being a gain to the company, indicate a serious loss and a material hindrance to the largest possible development of Industrial insurance. By December 31, 1881, The Prudential had increased its business to 133,582 policies for the aggregate sum of $10,959,948. The four companies now transacting the business had, in the aggregate, 367,473 policies in force. One company, the Provident Savings, discontinued the writing of new Industrial business during the year, and no longer makes returns in its annual reports of the Industrial business in force. Of the total business of The Prudential 56.5 per cent, was in force in the State of New Jersey, 24.0 per cent, in the State of New York, while 19.5 per cent, was in force in other States, largely in Pennsylvania. Referring to the extension of the business of The Prudential to the city of Paterson, the Paterson Press of April 22, 1882, expressed itself emphatically on the subject of Industrial insur- ance, and concluded an article of a column and a half as follows : THE PRUDENTIAL INS. CO. OF AMERICA, l88l-'84. 143 * ' We strongly recommend recourse to this excellent system of insurance by every person of moderate means, for with such a plan there is really no excuse for any person not maintaining his independence ; providing out of his own resources for a proper interment at death, for the payment of debts he may owe, for leaving to his survivors something to take the place at least temporarily of a productive life, for defraying those expenses which attend sickness and death of any member of the family expenses which, at one time or another, are absolutely certain to come to all." In the words of the Trenton True American, ' ' The press in all the principal cities of this country ' ' were " emphatic in their commendation of the plan." Among other elements of the population the Germans had, from the beginning, been extensive patrons of Industrial insur- ance ; naturally of a thrifty disposition, they had readily availed themselves of this form of providing for contingencies, and, in response to a distinct demand, The Prudential, as far back as 1876, had issued special explanations in German, and supplied its agents with applications in the German language, tending to make the aims and objects of Industrial insurance more easily understood. Hence the attitude of the German press, in a manner most critical of all social institutions and forms of saving and investment of non- German origin, seems of sufficient interest to warrant a quotation from the Carlstadt Freie Presse, under date of July i, 1882, in a free translation as follows : We have an overabundance of all sorts of sick-relief and aid associa- tions, but neither one form nor another offers that degree of absolute security which is necessary for the working population in case of need. The confidence of the public in these forms of co-operative or fraternal associations, in consequence of the bitter experience in our own village, has been so shaken and disturbed that we welcome the work of a company like The Prudential, which does away with the most serious objections made against the former type of burial or sickness associations. Naturally, such emphatic approval as this, founded on sub- stantial reasons, must needs have done much to influence the German population in becoming, in increasing numbers, the patrons of the Industrial system of The Prudential, and at the present time the Germans stand third in rank of nationalities which patronize the Industrial business of The Prudential. 144 HISTORY OF THE PRUDENTIAL. That public approval was not confined to the secular press is illustrated by the following extract from Our Church Paper, devoted to Christian interests as viewed by the Congregationalists of Newark, in its issue for April, 1882 : The Prudential Insurance Company, of this city, has had a history in some respects phenomenal. The Company is only six years old, yet it has issued over 300,000 policies and paid more than 4,000 death claims. It issues burial-fund policies upon the weekly-premium plan, the premiums being collected weekly by agents, at tfie residences of the assured. This institution is not organized as a benevolent society, but it would be hard to fond an association doing a work of greater good. And in the same publication, under date of May, 1882, oc- curred a further endorsement of the plan of The Prudential, which also seems worthy of a place in this summary of public opinion on the work of The Prudential at this early period of its history : If ever a company was started which deserved the sympathy and co- operation especially of the working classes, it is The Prudential. Almost alone, with a reasonable prospect of success, has it undertaken the solution of the great insurance problem of the day, how to provide a life-insurance company for those of moderate means which shall be deserving of the name. In the face of obstacles of no ordinary character, it has made astounding progress and secured a magnificent clientage. The concensus of public opinion was, however, most clearly expressed in a quotation in the Newark Register of January, 1882, namely, that ' ' The Prudential Insurance Company, of Newark, is emphatically the poor man's best and most reliable friend '." New problems and questions of practice were constant!}' arising which demanded the most careful consideration. The business was new, and much was expected of it which was not warranted by the plain policy contract between the insured and the companies. The notion still remained with many that life insurance was more of a charity than a business, and many writers on the subject of insurance still speak of it as a benevo- lence, when it is purely a matter of contract and of business. Fortunately, as I have had occasion to point out more than once, Mr. Dryden had early recognized the practical difficulties and dealt with them in a manner satisfactory to the policy-holders. Mr. Noah F. Blanchard, who had been President of The Prudential THE PRUDENTIAL INS. CO. OF AMERICA, l88l-'84. 145 from May, 1879, died on May u, 1881, and on the 23rd of the same month Mr. Dryden was elected President of the Company. In reference to Mr. Dry den's election, the Spectator of June 2, 1881 > properly said that ' ' If the growth of The Prudential is due in any important part to the individual efforts of one man, that man is John F. Dryden, and the Board of Directors pays him a deserved compliment in giving him the Presidency." Of Mr. Blanchard the Spectator of May, 1881, stated that "Throughout his life he had been a man of great activity and excellent health, identified with The Prudential from its inception and always manifesting a lively interest in its progress. His management of The Prudential with Secretary John F. Dryden was a great success, during his administration the Company having achieved in large part the good reputation it now bears. ' ' During the early part of 1882 The Prudential had been made the object of an attack in the newspapers on account of the sale of stock by a number of the stockholders, who, 110 doubt, were dissatisfied with the small returns which had thus far been real- ized. Certain unscrupulous parties, endeavoring to injure the reputation of the Company, had caused sensational reports to be circulated in the newspapers, and I can not do better than quote an article on the subject from the January number of the Spectator for 1882, which fairly explains itself : On Saturday morning, the 3ist ultimo, an article appeared in the New York Star, in which an attempt was made to throw discredit upon The Prudential, of Newark, by making it appear that a number of stockholders and directors were dissatisfied with the management of the Company, and had for that reason sold their stock. On the evening previous an attempt was made to smuggle the same article into all the New York dailies, but none except the Star noticed it. The Star at once had the subject investi- gated, and in its next issue did all it could to repair the injury by contra- dicting the whole substance of the previous article. The animus of this disgraceful trick is obvious, and taken in connection with the fact that, starting less than six years ago, the Company has built up a business upon which the annual premium income is more than $400,000 the largest of any company in New Jersey, except the Mutual Benefit Life its utter senselessness is manifest. We have heretofore spoken in strong terms of such methods by rival companies and their agents. Allan Bassett, who is prominently referred to in the article in question as the former president, was forced to resign that position by the Board of Directors, in May, 1879. For a time thereafter he was the agent of the New York Life, at Newark, but quite recently resigned to become the agent of a competing company in the special feature of industrial insurance there. He signalized this 146 HISTORY OF THE PRUDENTIAL. change by publishing a card in which an attempt was made to make it appear that he had just resigned the presidency of The Prudential to be- come an agent for an older and stronger company. This attempt utterly failed, and the present exploit is only another attempt in the same direc- tion, equally silly. The Prudential is a vigorous, sound, ably-managed company, justly entitled to the fullest confidence of the public, and that the sales of stock arose from no doubt of this is clearly shown by the following certificate of the gentlemen who sold a part or the whole of their stock : NEWARK, N. J., January 3, 1882. The undersigned, having recently sold stock of The Prudential Insurance Company, hereby certify that such sales were entirely business transactions, and should not be construed as evidence of our lack of confidence in the solvency of the Company. We believe the Company is sound and worthy of the confidence of the public. T. B. MANDEVILLE, WILLIAM H. MURPHY, 9,0 Broad Street; FRANKLIN MURPHY, BENJAMIN ATHA, WILLIAM WHITTY, JAMES G. BARNET, E. A. WILKINSON. Continuing, the Spectator said : The Prudential is doing a splendid work. It was the first Company to bring the benefits of life insurance within the reach of our working classes upon the English plan of weekly payments made directly to the company. There had been other attempts to do something in this direction through the cumbrous and objectionable machinery of the " Hildise Bund " or other societies, through which policies were issued to the members upon quar- terly payments, but they utterly failed, and it remained for The Prudential to solve the problem of insurance for the working poor, which it has done with astonishing success, and all attempts to throw discredit upon it or its management deserve the contempt of all right-thinking men. The field is large enough for all, and therefore any competing company, if self-respecting, should refrain from assaults which can not injure The Prudential as much as they hinder the growth of the business in the estima- tion of the public. The year 1882 had been full of new problems, and the strug- gle for success had been intensified by a most unfortunate devel- opment of an unfair competition and inter-company warfare. The business of the Company had increased to 196,007 policies in force for an aggregate sum of $15,738,973, and the corresponding growth of other Industrial companies had been such that the total number of Industrial policies in force in the United States rtnm HOMB OFFICE OF THE; PRUDE;NTIAI V INSURANCE; COMPANY OF AMERICA, 1883-1892. THE PRUDENTIAL INS. CO. OF AMERICA, 1881-^84. 147 now exceeded half a million, being 587,875 policies for $56,374,710 of insurance. Public approval of the new form of insurance continued, and from many sources there is evidence of an increasing respect for, and kindly interest in, the work of The Prudential. Among others, the Insurance and Commercial Magazine, in its issue of December 31, 1883, referred to the subject of Industrial insurance in the following language : Of all things poor people desire to avoid, is a " charity " burial of one of their children. By Industrial Life Insurance, as one of the Commissioners of Insur- ance truly said, children are insured for a premium of five cents a week, for an amount that provides a fair burial fund, payable immediately after death is reported, when of all times most needed. At this time, when the usual small weekly income is interrupted or used up for medical expenses, the little insurance money conies in as a sort of God-sent blessing to the poor, stricken family. The amount to be realized, forty or fifty dollars, is too small to tempt infanticide or criminal practice, and never has, even in England, where so extensively practiced ; and the little weekly premiums are not missed from the small weekly income. The tendency of Industrial insurance is only good, and in England, where so extensively practiced for the last thirty years, commands the uniform praise of the press, the pulpit, and the informed public. We understand there are over seven million families interested in it in England, and we see no reason why a like number should not become directly connected with it in this country. The growth of the Company had been such that during the year it became necessary to once more remove the offices, and on April i, 1883, the home office was removed to the Jube Building, 878-880 Broad street, Newark. This building was occupied by the Company for a number of years, when increasing growth and development made another and still more important removal necessary, to which reference will be made further on. The effect of the business, which was now sufficiently well established, made itself felt in other directions, and public atten- tion was drawn to the matter in an article in the Newark Daily Journal, January 19, 1883, in which it was stated that "The beneficial effects of this system of insurance are well known. Since The Prudential has been in operation the proportionate number of burials at the expense of the city has been very ma- terially lessened, and the Overseer of the Poor and undertakers 148 HISTORY OF THE PRUDENTIAL. will testify to this. People who before had no means to bury their dead now find it in the comfortable sums provided by their small weekly payments as premiums on policies in The Prudential. A policy in The Prudential is an absolute safeguard against a pau- per' s burial, and the amount obtained often bridges over for a considerable period the chasm of necessity caused by the death of any member of the family. ' ' This emphatic statement of the direct relation of Industrial insurance to public welfare was "further supported by the pub- lished returns of pauper funerals and general pauperism in the city of Newark, which indicated a very material reduction in both items of public expenditure since the introduction of the system of family insurance. Additional proof of the value of Industrial insurance as a method of teaching the habits of thrift in other directions is found in the statement of an Industrial agent in The Chronicle, a New York insurance publication, under date of November 15, 1883 : (< I soon found that my premium increase would be small unless I was able to teach the poor people thrift, and I often had to instruct them in the matter of saving the pence until I called, in order to keep the policy in force, and also to teach the better- to-do classes how to secure the benefits offered them for their small weekly pence. ' ' This view of the mission of the Industrial agent pre- vails extensively among the industrial population. It is not too much to say that the Prudential agent is, in the majority of instances, the true friend of those with whom he comes in contact. Few men more thoroughly learn to understand the ways and means of the wage-earning population, and few have better opportunities to extend the teachings of the gospel of thrift to those who need it most for the improvement of their social and economic conditions. Teaching the people thrift in one direction has been accepted, by many who have studied the subject, as equivalent to the teaching of thrift habits in other direc- tions, and those who, through the Prudential agent, receive their first instruction and encouragement in the direction of systematic saving must needs, in the course of the years, become better citi- zens, better producers and better off in material good things in consequence of their relationship to an Industrial insurance com- pany. THE PRUDENTIAL INS. CO. OF AMERICA, l88l- > 84. 149 As a rule, exceptional caution had been used in selecting men for the position of Industrial agents. Security for the faithful discharge of their duties was required, and inquiry was invariably made of applicants for positions as to past records in former employments. Still, it is perfectly natural that occa- sionally, or even frequently, unworthy men would succeed in securing positions which, for self-evident reasons, offered many opportunities for dishonesty and fraud. The Prudential had always dealt severely with men of this class, and had never hesi- tated to institute criminal prosecution for larceny or fraud. The handling of small sums of money incident to the conduct of the business was naturally an exceedingly difficult matter to manage, and Industrial insurance companies had found it necessary to make examples of agents detected in obtaining fraudulent com- missions or appropriating premiums to their own use. Once discharged, such agents would often connect themselves with other insurance organizations, usually bogus sick-benefit societies or so-called insurance associations. In other instances they would become connected with newspapers as reporters, and furnish all sorts of sensational matter founded on isolated instances, or on pure imagination. One of the methods was to send anony- mous communications to newspapers, containing charges against the companies, among others the intimation that children were insured for the purpose of realizing improperly at their death. The Pittsburg Dispatch of April n, 1883, contained reference to such a letter, but in explanation the paper stated that, ' ' For the information of the author of the letter referred to, it may be said that the companies thus engaged are recognized in the commercial and insurance world as both substantial and legitimate, and such men as ex- Postmaster- General James and others are interested in them. They issue no policies on lives of infants under one year of age. The highest policy issued on children under six is $60, and under eleven $123." The subject of life insurance for children had by this time attracted attention in other parts of the country, and, among others, General Butler, in an address made at Spencer, Mass., during the latter part of 1883, as candidate for the Governorship of the State, made a bitter attack on Industrial insurance and many other forms of life insurance. The subject was discussed 150 HISTORY OF THE PRUDENTIAL. in an article in the Weekly Underwriter* in which the errors of Governor Butler were set forth, making clear his absolute ignorance of the business and his self-evident perversion of the facts, the article concluding with the statement that "If he had made the speech in Boston a large number of his hearers could have told him that companies do not charge twenty-five cents a week for infantile insurance, and that they do not take a premium above five cents a week, and do not insure children for any larger sums than $100. They give no insurance at all for three months after the issue of the policy, and for the balance of the year from Jio to $14 in case of death. It may be that there are among Mr. Butler's constituents men who would murder a baby one year old for $10, but we do not believe it ; and so far from its being a fact that fathers in England have over and over again murdered their children, there has never been an authenticated case of the kind. ' ' The views of the Governor were also further referred to in the Standard of November 3, 1883, a Boston insurance publica- tion , the article concluding with the statement that ' * Governor Butler is lawyer enough to know that assertion is a good way from truth, and that impressions can never be substituted for facts. It is charitable to believe that he has gotten the impression in some way that this thing is done in England, but it would be well, before he makes such bold statements to the citizens of Massachusetts, for him to find one well-authenticated case of such a murder. ' ' The unfortunate aspect of the affair was the newspaper notoriety given to the business, and the influence such remarks naturally had on public opinion, especially among a class of people utterly unfamiliar with the practice of Industrial insurance, and on account of their wealth and social position, ignorant of the actual manners and morals of the industrial population. It has remained so to the present time, and the opposition to the business is to be found among the rich and well-to-do, or those otherwise out of touch with the working people ; and while millions of Industrial policies on children's lives are held to-day by working people and others, this fact has never had the slightest influence on the opinion of those who are opposed to this form of * Vol. 29, p. 229. THE PRUDENTIAL INS. CO. OF AMERICA, l88l-'84. 151 insurance.* As has previously been stated, from the very begin- ning The Prudential had carefully observed its experience on infantile lives, and no case of even abuse or indifference had come to the notice of the Company, to say nothing of an authentic case of the murder of a child for insurance money ; nor is there such a case on record to this day, although millions of children have been insured for many years in the United States. Industrial insurance had continued to make considerable prog- ress during the year, and by December 31, 1883, The Prudential had 273,917 Industrial policies in force, for the sum of $23,053,935 of insurance protection. The aggregate number of Industrial pol- icies in the United States now exceeded 877,000, while the total amount of Industrial insurance in force was almost $88,000,000. The business could now be considered completely established, and the question of ultimate success was now no longer open to a doubt. The subject was referred to in the New York " Insurance Report for 1884," as follows : The rapid growth of industrial insurance indicates that the advantages it offers are being presented with characteristic energy by the companies that are making it a specialty. The subject presents for serious considera- tion several phases that are important, both in the protection afforded the policy-holders and the probable result of the efforts to establish the success of the undertaking. The reserve to be charged has been the subject of discussion by actuaries and at several conventions of State Insurance officials. A plan was agreed upon, and has been observed with but slight modification for the past three years. It is admitted that the large number of lapses and the great expense of obtaining and retaining the business are elements that do not enter into Ordinary life insurance transactions. In fact there is no precedent to guide the companies. The operations of the Prudential, of London, are familiar, it is true, yet the State control * This also holds largely true of charitable and reformatory or correc- tional societies, of which it has well been said, in a report on The Unemployed in Massachusetts, that "The ordinary charitable institution as now constituted is not in touch with the industrial conditions. Such societies are organized for the relief of pauperism. They are so well accustomed to deal with the degraded or particularly unfortunate class that they necessarily lose a certain sort of tact and generous discrimination which is needed in dealing with men and women who, under ordinary conditions, are steady wage- earners." (Final report on the Unemployed. House Dpcument No. 50, p. xiv. Boston, 1895.) 153 HISTORY OF THE PRUDENTIAL. surrounding the American companies restrains them to certain methods that are diametrically the opposite of the freedom and judgment that have permitted and fostered the great success of the foreign company. It may be assumed, therefore, that the superintendent will use the widest latitude of discretion consistent with safety in building up and encouraging this plan for family insurance. It is a work of supererogation to refer in detail to the benefits conferred by the London company on the industrial classes of Great Britain, where its policy-holders number one-seventh of the popu- lation ; there is equal promise of benefit and success in the United States. The time for experimenting, it is true, has not passed, and there must be to some extent a different procedure in securing business compared with the operations in London. It is evident, however, that many points have been obtained by our companies from the foreign office, and supplemented successfully by the intuitiveness that discerns the faults and creates their remedies. The companies prosecuting the business in this State have in five years procured a membership equal to that of the [British] Prudential when it had twenty-eight years' experience. What can be prophesied of their future? The details connected with the collection of the weekly premiums and the verification of the work of the collectors are provided for and guided by a well-nigh perfect system. The increase each year in the number of people employed by the companies in their outside work indi- cates the popularity of the business. There is not recalled a single com- plaint made of any of the companies during the year, and, with a constitu- ency in this State that is quite formidable and growing daily, this fact is remarkable. It is significant to note, in this reference to the business, the statement on the part of the Insurance Superintendent, that ' ' There is not recalled a single complaint made of any of the companies during the year, and, with a constituency in this State that is quite formidable and growing daily, this fact is remark- able. ' ' To those familiar with the manner in which the business had been managed, and with the prudent and conservative methods which had been employed in extending the business, the fact referred to was not remarkable, for special efforts had been made to give complete satisfaction to those most vitally interested in the business that is, the Industrial policy-holders. The New York Tribune, also, in an article on Industrial insurance, dated July 10, 1884, concluded with the statement that "Some sentimental objections have been raised against Industrial insurance. The most serious charges are that it is used speculatively and induces infanticide. These objections are fully disposed of by the fact that actual experience proves them to be groundless. ' ' THE PRUDENTIAL INS. CO. OF AMERICA, l88l-'84. 153 The charge of child-murder, for the purpose of obtaining the small amount of insurance to be realized at the death of the child, hardly received serious attention at this early period. The quota- tion from the Tribune and the quotation from the Pittsburg Dispatch clearly indicate that the charge was not considered worthy of consideration, but hostility to the business manifested itself from another direction, in an attempt made during the early part of 1884, by a negro member of the legislature of Massa- chusetts, to force companies to accept colored risks at the same rates as those charged the white population. As has been pointed out, this method of discrimination was based on a very careful investigation of the subject, and was fully supported by a large body of official statistics. It was well said by the Weekly Under- writer, that if the proposed measure ' ' does become a law, its success will be due to sentimental consideration alone. ' ' Unfortunately, such sentimental considerations have very materially influenced legislators at all times and on all subjects, and during the next few years laws were passed, in nearly all the leading States, compelling Industrial companies to accept negro risks at the same rates as those charged the white population. Fortunately, the companies can not be compelled to solicit this class of risks, and very little business of this class is now written by Industrial companies, and practically none by The Prudential. The Prudential was the first company to discriminate against negroes, as stated in Mr. Dryden's letter of March 10, 1881, and in this attitude the Company was fully supported by the Insurance Commissioner of Massachusetts, who, in his report for 1884, stated that ' ' This was not a distinction on account of color, but on account of the difference in longevity between the two races, apparently supported by mortality statistics. That the distinction was dic- tated by race prejudice is not conceivable. The whole structure of life insurance rests upon a calculation of the probabilities of longevity and a just proportion of insurance charge to the risk taken, and to compel a company to insure for the same rates dif- ferent classes of people with different prospects of longevity would be to establish a grossly unjust discrimination against the longer- lived class in favor of the shorter-lived class. ' ' The progress of the Company during the year 1884, while not as great as during the preceding year, had nevertheless been considerable. The actual increase in policies was 50,877 against 154 HISTORY OF THE PRUDENTIAL. 77,910 during the preceding year. The financial and industrial depression of the period 1882^-' 86 had made itself felt in Indus- trial insurance, as well as in all other business operations. The business of the Company had been extended into new territory, and offices had been opened in the District of Columbia and Baltimore, Md. During the early part of the year, Dr. Leslie D. Ward, the Medical Director of the Company, and Mr. Dry den's associate in the founding of the Company, had been elected Vice- President in place of the Hon. Henry J. Yates, ex-Mayor of Newark, who was elected Treasurer of the Company. As Medical Director Dr. Ward had, from the beginning, shown exceptional executive skill and ability in managing the field operations of the Company, and while still occupying his former position, devoted himself with energy to the outside developments of the Company's interests. Dr. Ward has during late years been the executive manager of the Company's field force, and it is not too much to say that much of the success which the Company has achieved has been the result of his exceptional ability and devotion to the interests of the Company and to the promotion of its welfare. Various concessions and improvements in policy provisions were introduced at about this time and communicated to the field force under date of July 31 , 1884, in the following circular letter : POLICY CONDITIONS AND CONCESSIONS. 1884. First. All unnecessary verbiage has been omitted. The contract is plain and straightforward, and can be easily understood by any one. Second. Every restriction upon residence or liberty to travel has been removed. Third. The insured may engage in any occupation except military or naval service in time of actual war. Fourth. The policy is incontestable after two years. The above concessions will be extended to all policies heretofore issued. A change in benefits and rates was made under date of October 6, 1884, when the infantile rates were very slightly reduced, and immediate benefits of one-quarter during the first six months, changed to no benefit during the first three months, one-quarter benefit during the second three months, and one-half benefit after the policy had been six months in force. A new THE PRUDENTIAL INS. CO. OF AMERICA, 1881-^84. 155 clause was inserted, by which the Company assumed only one- half liability of any amount that might be due in case of death from consumption during the first policy year. A suicide clause had been inserted in the policy, which made the policy void if death from this cause occurred during the first three policy years. All restrictions as regards occupations were done away with, excepting military service, and an intemperance clause which had been early inserted in the policy was also eliminated. These changes in method were an indication of the careful supervision of the Company's interests, aiming rather at full justice to all policy-holders than undue liberality in the direction of impaired lives, or an otherwise undesirable class of insurance applicants. The actual business operations during 1884, as has been stated, had, however, been much hindered by the existing industrial de- pression, and it is something very considerably to the credit of the Company and the efforts of its managers that as large an increase as has been referred to had actually been made. The effect of this depression on the insurance business is referred to in the New York "Insurance Report for 1885," from which I make a brief quotation : The prosecution of the industrial insurance business during the year has been greatly hampered by the unfortunate situation of the laboring population, who, through a lack of employment and because of the numer- ous strikes, have not been in a condition, as a rule, to procure this protec- tion for their families. In the face of these difficulties the companies have been active in their canvassing methods, with quite creditable results. The detail of their transactions is enormous, and needs unremitting attention. With almost an army of workers the opportunities for wrong-doing are numerous, but the system adopted by the several corporations serves to prevent irreparable injury. When the benefits and advantages to the dependents of our industrial citizens, arising from membership in these companies, are thoroughly understood, the work of the corporations will be an experiment no longer, for the protection thus guaranteed will be regarded as a necessity. The Superintendent is in hearty sympathy with this endeavor, by corporate action, to promote the welfare of our poorer people, and he has but encouragement to offer the promoters of the plan. By December 31, 1884, The Prudential had secured for itself an enviable position in the world of finance and insurance. With almost 325,000 policy-holders, old and young, with an aggregate insurance liability of $28,545,000, with assets of $752, 878 and a capital of $115,000, the Company could now claim rank as one of 156 HISTORY OF THE PRUDENTIAL. the leading insurance companies of the United States. This result had been accomplished in the short space of nine years, nine years, however, of the most determined struggle and effort to make Industrial insurance a success in the United States. In commenting on the success of The Prudential and the annual balance-sheet for the year 1884, the Spectator referred to The Prudential and its methods and results in well-earned words of praise: "The Prudential was the pioneer industrial company, and has educated the American public to the advan- tages to be derived from small life or burial-fund insurance on the weekly-payment plan. * * * * The Prudential now operates in a number of States, over a wide field, and by the policy of scrutiny and good management maintained by the offi- cers each department, per se, is made to show a profit. The closest supervision is kept over the superintendents, assistant superin- tendents and agents, who are summarily dealt with for grievances reported and proved by policy-holders ; but, on the other hand, The Prudential bears a reputation for liberally treating its agents and employees, and for religiously studying their interests. * * * * The Prudential is essentially the people's company, furnishing, as it does, the facilities whereby even the poorest can obtain insurance to relieve their wants in times of dire necessity. ' ' * In a brief sketch of the history and progress of the Company, in commemoration of the tenth anniversary, published in the Spectator during the year 1885, Mr. Dry den contributed some very interesting facts pertaining to the early history of The Pru- dential, most of which have been taken account of in the earlier portion of this work. Among other interesting facts, however, Mr. Dryden stated that, on the first of January, 1885, the field force of The Prudential was estimated at 1,500, of which 34 were superintendents, 150 assistant superintendents and 1,200 agents, the balance being inspectors and special agents. The office force consisted of 55 male and 64 female clerks, besides the official staff. It has well been said that success in Industrial insurance is very largely a question of supervision and attention to detail, and it is difficult to convey an accurate idea of the magnitude of these transactions to those who are not personally familiar with the office management of Industrial companies. Everything * The Spectator, January, 1885. THE PRUDENTIAL INS. CO. OF AMERICA, l88l-'84. 157 possible lias been done to reduce clerical labor, waste and ex- penses to a minimum by method and system and the employment of special counting, calculating and other machines. In many of the most important improvements in policy contracts, such as the granting of dividends and paid-up policies, it has often been a most serious question as to how to provide for the necessary clerical labor in a manner at once efficient and yet economical. Having to deal with millions of policy-holders, the question has often been rather the expense of the necessary office transactions than the actual amount involved in the payments. Since these expenses or difficulties are largely inherent in the business, the best talent and ability has been devoted to the solving of prob- lems with which Ordinary life companies have never been called upon to deal. 158 HISTORY OF THE PRUDENTIAL. CHAPTER X. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, 1885-^888. While the growth of the Company had been rapid and consid- erable, only a beginning had been made. New offices were opened as fast as the necessary agency and management force could be trained for the positions, and the Company rapidly extended its operations westward, having entered Ohio first, and then, in suc- cession, all the other States of the Middle West. The first office in Ohio was opened in Cleveland, on June 29, 1885, and very soon other cities were added to the Western department of the Company's business. From the start The Prudential had held firmly to the theory that for permanent business progress it would be better for the Company itself to develop an agency staff and the necessary force of district managers, than to go outside of its own office for new field material. Hence the Company made conservative progress, and developed a force of employees whose loyalty can not be matched by any organization of men in this country. While something was sacrificed to this policy of The Prudential, the Company has never had cause to regret its position in this matter, and is satisfied with the results. The business of Industrial insurance continued to receive considerable attention during the year, especially from experts familiar with life-insurance problems, and, among others, Mr. August F. Harvey, one of the leading actuaries of the time, made an investigation into the practice and results, the conclusion arrived at being communicated to the Weekly Underwriter, May 23, 1885, as follows : I also made inquiry into some matters connected with the industrial business. It is comparatively new here, but the results of the trial, so far, favor its excellence and its permanency. The great advantage to persons of very limited means of being able to carry a moderate insurance for a low weekly cost, collected at their homes, extends beyond the mere conve- nience of the matter to the individuals concerned. The system relieves such beneficiaries from their worst anxiety the dread of burials at public THE PRUDENTIAL INS. CO. OF AMERICA, l885~'88. 159 expense and has actually, in many of the more populous quarters of the large cities, where extreme poverty prevails, had a marked influence in the reduced number of calls for aid in the public press ; it promotes small savings in people of higher advantages and encourages a thrift among the better classes who patronize the Company, which has its effect in the in- crement of the public wealth. I inquired particularly with reference to the public assertion, that the plan of furnishing insurances on infant lives was to invite child-murder, or such neglect as to bring its fatal results within the category of crime. If the statement is true in any degree, the foundation for it is so limited that it has not been particularly noticed. Mr. Harvey's conclusions were practically identical with those of Mr. Thomas B. Sprague, the President of the Institute of Actuaries of Kngland, who had also extensively investigated the subject, and, as a result, expressed himself in favor of the business, stating that, from the standpoint of public policy, the system of Industrial insurance was fully deserving of the public support, which had come to it in increasing amount, as the beneficence of the plan became more widely known to the indus- trial population. Irrespective of these expressions of approval and confidence on the part of the most competent actuaries, The Prudential made its own observations and investigations, and continued to examine carefully its own experience in every direc- tion, and on this basis of fact and knowledge the Company rests its side of the argument. From year to year the business of the Company had increased, and at the close of 1885 the total number of Industrial policy- holders had increased to 422,671. A corresponding increase had been made in the assets, which now exceeded $1,000,000, with a comfortable surplus of $323,037. With such results obtained during so short a period as ten years, the Company could well afford to look hopefully into the future and view, with but a small degree of apprehension, the frequent attempts made to dis- turb the progress of the business by newspaper attacks, unwar- ranted and unfair competition and unwise legislation, attempting to interfere with the operations of the Industrial companies on grounds of sentiment and prejudice. Mention has been made of the passage of a law in Massa- chusetts, compelling Industrial companies to grant equal benefits to white and colored applicants. Following the Massachusetts precedent, a similar bill was introduced by a negro member into the Rhode Island Legislature during March, 1886, which also became a law. The Prudential at this time transacted no business l6o HISTORY OF THE PRUDENTIAL. in Rhode Island, the Industrial business in that State being confined to the operations of one or two companies. In the adjoining State of Connecticut, Industrial insurance seems to have been further advanced, and considerable attention to the subject is given in the annual report of the Insurance Commissioner for 1886. Considerable space was devoted to the discussion of the business in general, and to the special require- ments as regards the valuation of Industrial policies. I quote the following remarks from Commissioner Williams' s report, as illustrating the views of one who had evidently made himself thoroughly familiar with the subject : Four of the twenty-seven companies whose transactions are consolidated in the statistics already given prosecute chiefly the business known as In- dustrial insurance. Policies average but little more than $100 in amount, and the premium is paid weekly. Five or ten cents a week, according to the age, will purchase an assurance of $100 for persons not past middle life, and thus a small provision for the future is brought within the reach of all who are insurable. The great body of workers dependent on slender daily wages ought to avail themselves of this plan, and not only great private but public benefit would result therefrom. The business is new in this country, but is extending rapidly. To these straightforward words of official approval of the business of Industrial insurance, from the standpoint of public policy, Commissioner Williams added the further service of a special recommendation in reference to the valuation of Indus- trial policies, based on a special report on the subject made by the Actuary of the Department, Mr. Sprague. Thus by 1886 the business had secured not only further official approval, but at the same time further official recognition as a distinct form of life insurance, demanding separate consideration on account of its inherent peculiarities and its essential difference from the Ordinary plan of life insurance. The recommendations were accompanied by a valuable table of weekly annuities and assur- ances applicable to the Industrial method of insurance for persons of all ages from o to 99. The subject of Industrial insurance received additional con- sideration this year in the annual report of the Insurance Com- missioner of Massachusetts, from which I also make a brief abstract : The term "industrial" or "prudential" is employed to distinguish a class of insurance for small amounts for weekly premiums of a few cents THE PRUDENTIAL INS. CO. OF AMERICA, l885- J 88. l6l each, such as persons of humblest means, dependent upon the wages of their labor or other limited income, can spare from their urgent necessities. The provision such insurance makes is only for the relief of immediate family needs created by the death of the insured, and when effected on the life of an infant of unproductive age and condition can properly provide for little more than decent burial charges. Ordinarily the life of an infant of tender years can not be deemed to have an insurable value, and for a parent to speculate a profit from the death of his offspring is repugnant to the natural feelings and to public morals. But a provision by insurance for the cost of sacred decencies to the relics and memory of the dead is worthy and legitimate. The Massachusetts Commissioner also referred to the fact that the Germania L,ife Insurance Company had discontinued the transaction of Industrial business, but had made an equitable arrangement with the policy-holders, by which the premiums were collected in the manner originally agreed upon. The last Industrial policy written by the Germania was dated Decem- ber 27, 1886, and this closed the second unsuccessful attempt on the part of an Ordinary company to transact an Industrial business, the Provident Savings having previously abandoned a similar effort. The principal reason on the part of these com- panies for discontinuing the Industrial business must needs have been the fact that the business was exceedingly unprofitable dur- ing the early years of operation, and it must have been real- ized that it could only be made successful by the application of exceptional ability and industry. The Prudential Insurance Company of America, like other Industrial companies, including the Prudential of England, had passed through a period of financial difficulties, but by careful management and unremitting industry it had now reached a position where ultimate success on a large scale was only a question of a few years. Apart from the words of encouragement and approval of Indus- trial insurance companies by actuaries and insurance officials, and the general public approval as manifested in the increasing num- ber of policy-holders, evidence is not wanting to show the indi- vidual appreciation of the beneficence of the business. As a per- tinent illustration of the value of Industrial insurance from the standpoint of public policy, I give space to the following letter signed by one of the Sisters in charge of the Troy Hospital, of Troy, N. Y. It would seem that a young woman by the name of Elizabeth Flynn had died in the hospital, on the 5th of April, 162 HISTORY OF THE PRUDENTIAL. from pneumonia. Some seven months before she had been pru- dent enough to take out an Industrial policy with The Pru- dential, paying a weekly premium of only five cents. The Industrial policy would seem to have been the only means of providing for a respectable funeral. The letter will indicate the favorable view of Industrial insurance held by the Sister Superior : Poor Miss Flynn, before she died, requested that I should look after the interest of her policy and to see that she had a respectable burial, all of which I have done. I think this branch of insurance is an excellent thing for poor people, especially so when the Company is so prompt when called upon for settlement. There is no trouble about it. When Elizabeth died I notified the superintendent at room 3, Harmony Hall. He came imme- diately for the necessary information, and has given me a check for the amount the policy called for. I feel interested and would not hesitate to recommend the Company and its system to all who are desirous to make a provision for themselves or their families. SISTER ANGEUNE, Troy Hospital. As another instance of the value of the system of Industrial insurance, I give space to an item which came to public notice during the year 1885, and which I quote from the Insurance Record of June of that year : Industrial life insurance is permeating the entire community. At the recent fire at Sullivan & Company's printing and binding establishment in Cincinnati, seventeen young ladies were working upon the fifth floor of the bindery. Of these, fifteen were burned to death. Of the fifteen, seven had industrial policies. Their total insurance amounted to $1,102. Some of the policies were recently issued and were thus not in full benefit, but $641 was the amount due, and this was paid the day the proofs of death were received. The total premiums on the seven policies amounted to 50 cents a week. The gross sum received on all the policies was $18.15. It is self-evident that such instances as these had a measur- able effect in promoting the growth of Industrial insurance among the industrial population, a population ever confronted by contingencies leaving practically no choice between insur- ance and decent interment or improvidence and the pauper's grave. The actual extent of the public benefit already achieved during the short period of the Company's operations is illustrated THE PRUDENTIAL INS. CO. OF AMERICA, l885-'88. 163 in the following table, showing the claim payments made by The Prudential during the first ten years of its history : PAYMENTS MADE TO POLICY-HOLDERS BY THE PRUDENTIAL INSURANCE COMPANY. 1876-1885. PAYMENTS TO POL1C Y-H OLDERS. 1876, . $1,958 oo 5,296 oo 11,338 oo 23,013 oo 57,256 oo 111,508 oo 157,706 oo 222,083 oo 322,382 oo 418,622 oo 1877 . 1878 1870 . 1880, *^^^A B " " ** V^^NJ 1881, 1882, * i88t V J 1884 . */ ' .'/ 1885 . 1876-1885, . . $1,331,162 oo It will be observed that during the first decade of business operations more than $1,331,000 had been disbursed in claim pay- ments, rarely exceeding $100, often as low as $15, and sometimes as high as $500. By 1885 the annual disbursements had exceeded $400,000, which for the time represented a vast sum to be disbursed in insurance claims among a population not previously provided for in this manner. Much of the success of the Company must be attributed to its method of paying claims within twenty-four hours after proofs have been received at the home office, and often imme- diately upon the presentation of facts which leave no doubt that the claim, on office examination, is in all respects satisfactory. The Company, from the beginning, had acted on the principle that where the money was needed it was needed at once, but at the same time no safeguard was left out of consideration for the full protection of the best interests of the Company and its policy-holders. A critical period in the Company's history had been reached, which required the most careful consideration and executive skill in devising means to provide for the increasing demands in directions not anticipated when the Company was estab- lished, ten years before. I/arge numbers of the Company's 164 HISTORY OF THE PRUDENTIAL. policy-holders had gradually become educated in life-insurance principles, and the tendency of life insurance towards small amounts had been considerably extended upward, that is, towards a class of people somewhat better off in material good things and able to pay larger premiums, insuring for larger sums on the weekly-payment plan. The average amount of Industrial policies, as well as the average premium, was observed to be gradually increasing, tending to confirm this view, and it had become clear to the officers of tlje Company as early as 1880, as was later so ably pointed out by Mr. Charles Booth in his work on " Pauperism and the Endowment of Old Age," that ' ' Provision in this way that is by Industrial insurance against death has become very general in recent years ; and I am told that the amounts insured with such companies as The Pru- dential tend continually to increase, showing that something beyond mere funeral expenses is thought of. Here we have an active and natural growth of thrift which it will be wise to leave alone, except in so far as its action can be facilitated or its benefits made more secure. ' ' * Already in 1880 a new policy had been offered, by which it was possible to insure for even sums of $500, but the present demand was rather for a form of insurance providing not only a burial fund, but, at the same time, a fairly substantial support for the surviving members of a family; hence this year the Company offered to the public a "Special Adult" policy, which among other provisions contained what was, for the time, a most liberal and novel concession to Industrial policy-holders, namely, a non- forfeiture or extended insurance clause, to take effect after the pol- icy should have been in force for a period of at least three years. By 1886 the Company was therefore able to take the first step in the direction of non-forfeiture provisions in Industrial insurance policies, which had been contemplated and aimed at in Mr. Dry- den's early efforts, but which, on the best actuarial advice, were not expedient at the time, in the absence of actual experience gained by Industrial companies. Reference is made to the new policies and slight changes in the table of Industrial rates, in the follow- ing letter to the field force, dated January 4, 1886 : After mature consideration, the Board of Directors have decided to in- crease slightly the Benefits under our present table, and hereafter policies * p. 156. THE PRUDENTIAL INS. CO. OF AMERICA, l885~'88. 165 will be issued according to the schedule hereto annexed. Claims under policies hitherto issued will in future be adjusted according to the new table. We hope our members will see, in this voluntary action on the part of the Company, an evidence of that fair and liberal spirit with which it has been our aim in the past, and in which for the future we expect to deal with our policy-holders. The Board has also authorized the issuance of Adult Policies for amounts from $500 to $1,000, under a Special Table of rates somewhat more favor- able to the insured than the $500 Table previously issued. You will find this Table of benefits also hereto annexed. Applications for these policies must be upon a special form which will be sent you. A special Medical examination will be required, for which the Company will pay $i. Policies under this table will be issued with the following condition : If after the payment of the weekly premium hereon for three or more years this Policy shall become void by reason of default in payment of pre- miums, the Company agrees to issue a paid-up policy for the sum hereby insured, for a term of as many weeks as the number of times the full legal reserve upon this Policy at the time of forfeiture contains the premium for said sum insured, at the age of the insured at the time of the lapse, accord- ing to the published rates of the Company for Special Industrial whole-life policies ; provided that the Policy shall be surrendered to the Company and application made in writing for such paid-up policy within sixty days after default in the payment of premiums hereon. This new form of policy and the important concession of paid-up insurance constituted a further distinct step in the direc- tion of extending the Industrial insurance system to the masses and the development of what, for want of a better name, I have elsewhere called Industrial-Ordinary that is, insurance for any amount, small or large, with premiums payable on any plan, and designed to meet the demands of all the various elements of the American population. The business, after ten short years, had outgrown the earlier conceptions ; it had been modified according to American experience, and had been strictly adapted to the social and economic conditions of a rapidly improving Industrial population, where the poor of to-day are the well-to- do of to-morrow and the rich of later days. Taking into account the facts of the Company's own experi- ence, The Prudential had placed the Special Adult policy on the market, and, as a further evidence of rapid adjustment to improved conditions and specific demands, commenced the issue of regular Ordinary life policies on plans identical with those of the leading Ordinary level-premium companies of the time. The first Ordi- nary policy was written on January igth of the year 1886, and 166 HISTORY OF THE PRUDENTIAL. by the end of the year 427 of such policies, for a sum of $585,500, were in force on the books of the Company. The Industrial business by the close of 1886 had reached 548,433 policies, insured for $59,328,627. The actual increase in business had been over 125,000 policies, or at a rate of 29.8 per cent, over the number in force at the end of the previous year. A corresponding improvement had been made in the finances of the Company, and the assets now exceeded $1,425,000, with corresponding lia- bilities of over $1,019,000, leaving a substantial surplus of over $406,000. By January, 1887, The Prudential operated in eight States, including Missouri, where an office had been opened in the city of St. Louis. In commenting upon the progress made by the Company, Mr. Dry den, at the annual reunion of officers and agents, at the Academy of Music, made mention of the fact that "The policy of The Prudential has been to make haste slowly, and it is only a few years ago that we ventured outside of the State ; now its agents are in eight States in the Union, and, among others, we have in Pennsylvania a membership of 140,000, in New York 180,000, in New Jersey 185,000 ; of the latter 70,000 policies are in force in the city of Newark." The work of The Prudential had now become sufficiently known to attract public attention, and one of the New York news- papers, under date of February 6th, contained a full description of the system and objects of The Prudential, from which I make a few brief extracts : If you were to go into any of the many little towns and villages which lie thickly clustered together in the vicinity of Newark, N. J., and were to talk with the families of limited means, or if you were to make a canvass of the homes of the industrial classes in the great manufacturing city just named, you could insure for yourself the discovery of at least one subject of common interest fo all with whom you came in contact, by mentioning the name of The Prudential Insurance Company of America. Here is an institution which, though but eleven years old, has taken a firm hold upon the confidence of the people for whose benefit it was established, and which is doing splendid and beneficial work in all the territory upon which it has entered a territory, however, which, as you will presently see, is by no means limited to the region I have mentioned. In recent Sunday chats I have described two novel and successful schemes of insurance. The scheme of Industrial life insurance as exemplified in this great insurance company of Newark, N. J., can scarcely be called novel, inasmuch as it has been in successful practice for nearly a dozen years and was founded upon equally successful experience in London, England ; but the subject is one which THE PRUDENTIAL INS. CO. OF AMERICA, l885~'88. 167 I do not think is as widely understood or appreciated as it should be, and which is deeply interesting. On Broad street, in Newark, N. J., stands a spacious, handsome and substantial building, exclusively devoted to the business of The Prudential Insurance Company of America. In 1875, when, in the face of great dis- couragement, this Company was organized, a small office adequately accom- modated the transaction of its business. To-day the fine structure on Broad street is becoming too small for the transaction of that business. Other insurance companies talk about millions, but they are millions of dollars, not of policy-holders. Can you point to any other company in the United States that had issued anything like this number of policies ? This is truly a company of the people, for the people. How does it differ from other companies? Simply in this, that it is designed not as a means whereby a man, in sufficiently affluent circumstances to be able to pay the heavy premiums charged by other insurance companies, can arrange to leave a fortune to his heirs, but simply for the immediate benefit of poor families into which death enters as a doubly great affliction, bringing not only the pangs of bereavement, but the misery of debt. It is a system which enables even the poorest families to provide for the decent burial of each member of such families. It is a feature of The Prudential Insurance Company that death claims are paid within twenty-four hours after proofs of death are presented. Granted that a company of this description is honestly and honorably conducted, its blessings to the great army of wage- workers must be admitted. That the affairs of this Company are so con- ducted is proved by the fact that it has been admitted into the insurance field of eight different States, New Jersey, New York, Pennsylvania, Maryland, Delaware, Ohio, Illinois and Missouri, and also into the District of Columbia. This fact alone, under the strict and just insurance laws existing in these States, should be a sufficient guarantee of the soundness of the system and the standing of the Company, but the figures found in the last annual statement of the Company speak for themselves. It is to Mr. John F. Dryden, now the President of The Prudential, that the United States is indebted for the establishment here of this plan of Industrial insurance which had proved to be such a blessing to the work- ing people of England. He organized the Company and then, with the consent of the Board of Directors, went to England, where he made a thorough study of the system of Industrial insurance. I regret that space will not allow me to describe in detail the systematic and splendidly organ- ized manner in which the business of this Company is conducted. Over 2,000 persons are employed at headquarters and in the field. Is there any wonder that this system of insurance is popular with the people, and that the number of policies issued exceeds a million and a half? The success of the Company, no doubt, attracted the atten- tion of other insurance managers, and a number of attempts were made this year to establish new Industrial companies ; among others, the American L,ife Insurance Company of Philadelphia 168 HISTORY OF THE PRUDENTIAL. made a short and unsuccessful attempt, while a more satisfactory effort was made by the People's Insurance Company of Norwich, Conn., organized by some of the leading citizens of that State.* Actual business operations were commenced by the latter company in 1888, and continued with a fair degree of success for a num- ber of years ; but after having given the business a sufficient trial, the company discontinued operations, reinsuring its risks in one of the leading life companies. Few experienced underwriters could properly estimate the enormous difficulties in the way of success in the operation of an Industrial company. Few could realize that it required exceptional talent and exceptional aptitude to make this branch of the i nsurance business a success. The ques- tion has^of ten been asked why it is that there are so few companies like The Prudential, the Metropolitan and the John Hancock,f that have succeeded on a large scale. The answer is that, while there are to-day some ten or eleven other Industrial companies operating successfully on a small scale, it is only through men of exceptional ability and by the most arduous efforts that Industrial insurance can be made a profitable and secure business enterprise. Fortunately for the good name of the business, the companies which organized unsuccessful Industrial branches, or which had been organized for the distinct purpose of transacting an Indus- trial business and had failed, discontinued their efforts in an honorable manner. Not a single dollar has ever been lost to an Industrial policy-holder on account of the failure of a legiti- mate Industrial company. The peculiar difficulties confronting those who would undertake new enterprises of this kind are well stated in an article in the Spectator for December, 1887, which, in addition, contains some pointed references to other aspects of the business, which may properly find a place in this summary * Mr. David A. Wells, the well-known political economist and writer on taxation, was one of the incorporators of this company. t Among the smaller Industrial companies, The Life Insurance Com- pany of Virginia, with its home office at Richmond, Va., has been excep- tionally successful in the Southern States. This company had been organized as an Ordinary company in 1871 and met with but very modest success until, in 1887, an Industrial department was added, which by slow degrees has reached proportions of considerable magnitude. The first Industrial policy of the Life -Insurance Company of Virginia was issued in April, 1887, although a few so-called Prudential policies had been issued in the cities of Richmond and Petersburg during the years 1880- '87. THE PRUDENTIAL INS. CO. OF AMERICA, l885~'88. 169 statement of historical facts pertaining to the origin and growth of The Prudential Insurance Company : The peculiar features of industrial companies are such as to almost preclude the possibility of combining them with other forms of life insur- ance successfully. The number of agents required in the field for canvas- sing and collecting purposes is equivalent to a small army. Each one of these is selected because of his special qualifications to deal with the class of persons insured, for they have to be handled with much tact, and the agent must possess a good knowledge of the condition of each one of his clients, ascertaining his earnings, habits, etc. Furthermore, the agent must be punctual, and appear promptly to receive his premium at the time specified in each instance, or he is liable to be disappointed. Hun- dreds of men have undertaken to do this work and given up in despair after a few days' or a few weeks' experience, being wholly unqualified to deal with the working people. The amount of good accomplished by these industrial insurance companies is not to be measured solely by the amount of money paid to the beneficiaries under the policies issued, for it has been the means of introducing frugality where previously reckless extrav- agance had reigned. The money to pay the premiums is often saved from the beer or the tobacco allowance of the man, while the women, who have become familiar with the usefulness of the system, practice all sorts of economies to save enough from their household expenses to pay the required weekly premium. The companies are overwhelmed with letters from persons who have been benefited by this plan, testifying to the manner in which they have been relieved from the direst distress by the receipt of the money secured to them by one industrial policy. It is a good iking for the community that this form of insurance has come into so general favor, for it is imparting ideas of economy and prudence among a class of persons who sadly need such teaching. The business progress of The Prudential during the year 1887 had been exceptionally satisfactory. The net increase in Industrial policies in force was 188,476, equal to 34.4 per cent. The assets of the Company had increased to almost $2,000,000, while the surplus had increased to $487,078. Some progress had been made in the Ordinary branch, showing an increase from 427 policies in force at the close of 1886 to 735 policies, for the sum of $945,000, in force at the close of the year 1887. In commenting upon the twelfth annual statement of the Company, published during the early part of 1888, the New York Tribune repeated its former words of approval of Industrial insurance, stating that The Prudential is an invaluable help to the poor and middle classes. It paid in death claims, during the year 1887 alone, nearly one million of 1 70 HISTORY OF THE PRUDENTIAL. dollars. In addition to this great benefit it is working a revolution among the working classes in fostering habits of thrift and foresight, which redound to their profit in numerous ways. That they appreciate their relation to it is shown from the fact that about three-quarters of a million of persons hold policies in this Company. Mention has been made of the improvement in policy condi- tions made by the Company during the preceding years. The most important concession made to policy-holders was the addi- tion of a paid-up or surrender-value clause in the Special Adult policy issued for the first time during 1886. However desirable it would have been to have extended this provision to regular Industrial policies, it was inexpedient to make such a concession at that time, partly because the business was in its initial stage and partly because the necessary experience for such an impor- tant concession had not been gained. This step, however, must be regarded as proof of the Company's honest intention to deal equitably with all its policy-holders, and it is something very con- siderably to the credit of The Prudential that this important con- cession was made before the State Legislatures had attempted to force Industrial companies to grant surrender values on Industrial policies. I recall these facts in view of an attempt made during the early part of 1888, in the State of New Jersey, to pass a bill compelling Industrial companies to grant non- forfeiture privileges after a policy had been in force for only two years. It will be recalled that, as far back as 1880, a special committee of Insur- ance Commissioners had reported adversely on the proposition to compel Industrial companies to grant surrender values. The merits of the case are best set forth in the following quotation from the Insurance World, which will make clear the Company's side of the argument, at the time when this attempt was made to burden the business of The Prudential with legislation adverse to the best interests of its policy-holders : The rapid strides made by the companies doing Industrial business has brought its natural result in awakening the attention of the legislators, and a bill has now been introduced in the New Jersey Legislature to render in- dustrial policies non-forfeitable after they have been in force for two years. The absurdity of this lies in the fact that most of these policies average less than $150 each. The net reserve at the end of the second year at age twenty-five would be 12.28 per thousand by the American Experience 4j^ per-cent. table. A policy for $150 on the ordinary life plan would accumu- late in two years a reserve of $1.93 only. But Industrial insurance is only THE PRUDENTIAL INS. CO. OF AMERICA, l885~'88. 171 term insurance in fact, and the reserve would be so infinitesimally small that a good actuary with a powerful glass would scarcely be able to distin- guish it. In fact the paid-up insurance would hardly be large enough to pay the fare of the individual who should go to collect it. The subject was also referred to in the annual report of the Insurance Commissioner of Ohio for 1888, to which the Chronicle of New York, under date of July 26th, replied in the following manner : We think a number of reasons can be given why the granting of sur- render values to Industrial policy-holders after the time mentioned by the Ohio Commissioner would be impracticable, not to say inexpedient. Some of the reasons may be briefly mentioned. The average Industrial policy is small, probably not much more than $100. The reserve on a policy for this amount is very small indeed at the end of two years ; in fact, it would not amount to a large sum at the end of ten years, whatever the age of the in- sured. The expense of actuarial calculation of the surrender value and the deduction of a proper surrender charge would make the " equitable surren- der value " in many cases an infinitesimal sum. In short, the cost of valu- ing Industrial policies as suggested by Mr. Kemp would very likely be heavy enough to offset any possible benefit the lapsing policy-holder might derive. Moreover, the lapse tendency in Industrial insurance is very strong. The Prudential, whose experience the Ohio Commissioner quotes, lost over 320,000 policy-holders last year by lapse. Undoubtedly the major- ity of these lapses were on policies that had been in existence less than two years ; still a considerable number of the policies had probably reached that age. The chief object of Industrial insurance is to furnish a burial fund. A matter worthy of careful thought is the question whether whatever forfeit- ure there is in this plan of insurance might not better remain what it now is, a slight inducement toward persistence. Industrial insurance is trans- acted on the stock principle. There are no dividends, and the premiums, while necessarily relatively large, are not excessive when the tremendous cost of weekly collections is taken into account. The opinion which Mr. Kemp appears to hold about the ratio of profit in the Industrial business in Ohio will probably be modified in a few years, when this kind of insurance has been prosecuted longer in his State. Without discussing at length so involved and complex a question as the Company's practice in dealing with lapsed Indus- trial policies, I need only repeat, what I have stated in the begin- ning, that Mr. Dryden and his associates had fully considered this question before a single policy had been issued, and the subject received constant attention during every year of the Company's early existence. After sufficient experience had been gained The Prudential was the first Industrial company to grant not 172 HISTORY OF THE PRUDENTIAL. only paid-up policies, but also cash-surrender values to Industrial policy-holders. Attempts were made this year to create a class sentiment against Industrial insurance by sensational newspaper articles on the subject of life insurance for minors. The year previous, articles had appeared in St. Louis newspapers reflecting upon the practice of Industrial companies, while this year they were confined to a few newspapers of Philadelphia. This agitation, no doubt, was. largely the result of an effort on the part of the Seventh Ward Charity Organization Society of Philadelphia, which had petitioned the Pennsylvania Legis- lature to secure legislative prohibition of the life insurance of children, on the ground that mothers were likely to murder their children for the purpose of obtaining the small amounts of insur- ance receivable at death. The argument in favor of adverse legislation on the subject of life insurance of children, from the viewpoint of the Philadelphia Charity Organization Society, was well answered in a brief article in the Standard of Boston, under date of November 3, 1888, as follows : A Philadelphia charity organization declares its intention of memorial- izing the next Pennsylvania Legislature to abolish infant insurance. This idea was doubtless fed and fired by the half-baked newspaper articles that have followed one or two sporadic cases of maltreatment of insured infants. Adopting momentarily, for the sake of argument, the low view of human nature evidently held by these Philadelphia philanthropists of small research, a little painstaking would have taught them that infant insurance, as carried on by the reputable companies, is so arranged as to offer no incentive for manifestations of avaricious cruelty or crime. But even if this were not so, we have greater faith in our fellow-beings than to believe them capable of such horrible practices for the ignoble pittances they would secure. I have made mention of these fragmentary evidences of the increasing opposition to the practice of Industrial companies in accepting small risks on the lives of children for burial pur- poses, to account for more recent and more determined oppo- sition to this branch of the business, to which reference will be made later on. Whatever might then or now be said or thought of Indus- trial insurance from the standpoint of public policy or of the individual policy-holders, this much is certain : it is this form of life insurance for the masses which alone has survived in the THE PRUDENTIAL INS. CO. OF AMERICA, l885~'88. 173 struggle for existence, has accomplished what it set out to do, has increased in extent of operations from year to year, with never a check or evidence of diminishing popularity, and represented at the close of 1888 a more formidable array of figures and facts in its own support than could be marshalled in behalf of any other form of life insurance or investment in America. While, previous to the organization of The Prudential, a large number of efforts had been made to organize insurance companies or societies for the benefit of the industrial population, not one had succeeded in reaching a sufficient degree of popularity or of financial security to survive more than a score of years at the most. But these efforts had not come to an end with the organization of an Industrial company, they had not been seriously hindered by the growth of Industrial insurance in all parts of the country, but in a measure, and contrary to expectation, an increasing number of ventures in all directions had been made to compete with the legitimate form of Industrial life insurance by methods offering cheap insurance to a large element of the population still unfamiliar with insurance principles, and unfamiliar with the past history of unsuccessful insurance enterprises. Among a large number of pseudo-life- insurance efforts made during the early years of Industrial insur- ance history, I have already made mention of some, and space is not at my command to deal exhaustively with this subject. Near the close of 1888, however, the operations of pseudo or bogus imitations of Industrial companies had increased to such an extent that the State Department of Insurance of New Jersey found it necessary, in an open circular, to warn the public to beware of the Industrial Association of America, with offices at Newark, N. J. According to the Investigator, October 13, 1888, * ' This fraud is evidently attempting to trade on the high commer- cial standing and long-established reputation of The Prudential Insurance Company of America. The similarity of names would be traded on to the advantage of the fraud and disadvantage of the legitimate corporation." An apparently honest but rather curious effort in the direc- tion of workingmen's insurance for burial purposes was made this year, at Camden, in the State of New Jersey, by the United States Funeral Directing Company, which proposed to operate on a plan entirely new and different from any other method of insurance provision against contingencies. A somewhat similar effort in this direction had been made as far back as 1873, * n 174 HISTORY OF THE PRUDENTIAL. Richmond, Va., and, no doubt, in other cities also, but without success. The object of the Camden company was to provide for a decent interment at a cost of from $30 to $100, but after a brief experience the attempt was discontinued. The reasons for failure are that life insurance on the Industrial plan, after the initial stage has been passed, aims at more than mere provision for burial expenses. Persons will begin by insuring for five-cent premiums for burial purposes, but after a year or more increase their premiums to secure a sufficient sum to pay the cost of the last illness ; later on, by further increase in premiums, provi- sion will be made for dependents, and in this manner a more complete purpose, as in Ordinary insurance, is secured or largely realized. Hence, the failure of the Funeral Directing Company came not unexpectedly to those who had made a thorough study of Industrial insurance underwriting. THE PRUDENTIAL INS. CO. OF AMERICA, l889~'9I. 175 CHAPTER XI. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, 1889-1891. The difficulties which had been experienced during 1888 had not materially hindered the progress of the Company, and by the close of the year there were over 850,000 Industrial policies in force. In addition there were now, in the Ordinary branch, 915 policies in force, indicating a slight but substantial increase. The growth of the Company made necessary the serious consid- eration of the erection of a home-office building, and during the year a plot of ground on Broad street was purchased for the purpose of erecting thereon, in course of time, a substantial structure. The Insurance Times, in its issue of December, 1888, quotes from the Newark Daily Journal the following reference to the real estate transaction : In a few years The Prudential Insurance Company will erect, at the corner of Broad and Franklin streets, a building that will be an ornament to the city. The plot of ground owned by the Company has a front of 89 feet on Broad street, and it runs back 160 feet to an alley. It is proposed to have a large open court in the middle of the plot, with an entrance from the alley for carriages, and the building to rise on four sides to a height of six or more stories. But the managers will not decide upon any plan until after the finest buildings in this country and Europe have been inspected, the aim being to construct an edifice that will meet all the requirements of the rapidly increasing insurance business. Plenty of light and air will be needed for the army of male and female clerks and other employees, for the Company has so prospered since its organization, thirteen years ago, that over 800,000 payments are now recorded weekly at the home office in Newark on life-insurance policies. The Company employs several thousand clerks and agents, and is extending its business to the growing towns in all the States and Territories. For reasons which need not be dwelt upon, the Company, very soon after this transaction, did not consider the property sufficient for its purpose, and during the early part of 1889 one 176 HISTORY OF THE PRUDENTIAL. of the most desirable pieces of real estate in Newark, in the heart of the city, with a frontage of 70 feet on Broad street, was purchased for the sum of $275,000, as a site for the home- office building, to be constructed during the next few years. According to Insurance under date of February 8, 1889, "It is the intention of the Company to erect on this lot a substantial and handsome building for the accommodation of its own vast and growing business and affording large room for rental pur- poses. The work of construction will not be begun for some two years, for the Company's lease of its present quarters has still four years to run, and after the plans are fully matured something like two years will be taken for carrying them out. The Pru- dential has never been in a hurry from the beginning. It was very particular about foundations. And it built to stay. ' ' A further reference to the purchase of the property and the proposed home-office building of the Company occurs in the Insurance Critic for March, 1889 : The Prudential Insurance Company of America, which so successfully conducts the business of industrial life insurance from its home office at Newark, has recently purchased a valuable and central site in that city, with the design of erecting thereon a commodious and handsome office build- ing, that shall be an architectural ornament to the place. The property is situated at the corner of Broad and Bank streets, and was bought from two owners ; the larger part from Justice Joseph Bradley, of the United States Supreme Court, for $275,000, and the balance, known as the Wiss property, for $38,000, the entire outlay being $313,000. The frontage is 70 feet on Broad street, 265 feet on Bank street, and 140 feet on I/ibrary court, and the entire plot contains 25,000 square feet. The new edifice will be built on the portion purchased from Justice Bradley, and will be so con- structed that an extension in harmony with the main design can be erected when the growing business makes it necessary. * * * * The general design is to put up a nine-story, fire-proof building, in size 70 by 231 feet, to cost about $500,000. All the conveniences and improvements devised by modern skill and art will be introduced. It is believed that the favorable loca- tion and the interior attractions will occasion a large demand for offices in the space on the several floors not required by the company itself for the trans- action of its business. The company will make use of the larger portion of the building in its own work. When it entered its present home office, less than six years ago, its clerical force for the office was below fifty ; it now employs two hundred and twenty-five clerks. At first it rented out the two upper floors, but increase of business soon compelled it to occupy the entire edifice, from basement to attic, to hire the basement in the adjoining building for the construction of additional vault room, and to place its local agency force in other parts of the city. The company's THE PRUDENTIAL INS. CO. OF AMERICA, 1889-91. 177 employees are now numerous enough to form a circle of society by them- selves. They have organized a literary and musical association, which holds regular semi-monthly meetings. The Prudential "Old Guard" in- cludes those who, having served the company faithfully and continuously for certain periods, are presented with certificates and badges, bronze badges for five years' service, silver badges for ten years, gold badges for fifteen years, and gold badges with a diamond set in each for twenty years. The members [of the Old Guard] receive also special consideration in their business dealings with the office. The company's growing business and increasing clerical force show the need of enlarged accommodations. The building to be erected will also be a monument to the prudence and forethought of the company's large clientage. Nearly a million people hold its policies, and of this great number about one hundred thousand are in Newark and its near vicinity. The plans of the Company with respect to the proposed building were carried out practically in accordance with the pre- ceding outline, ground was broken in September, 1890, the new building was completed during the early part of 1892, and actual possession was taken on May i, 1892. So rapid, however, was the growth of the Company, and so promising its future, that steps were taken to purchase more real estate than was required at that time, and during the latter part of 1889 an additional portion of real estate was purchased contiguous to that previously acquired. The subject will be further referred to under its proper date. The good work of the Company had continued to be appre- ciated, and volumes could be filled with the expressions of public approval to be found in the records and archives of The Pruden- tial. One of the earliest friends of the Company, when the busi- ness was in its infancy, had been the Metuchen Inquirer , cordially approving of the then new and untried plan of Industrial insur- ance, when the same was first made known to the people of New Jersey. I can not do better than quote from an issue of this same paper, during the early part of 1889, a few words of further commendation of the results of Industrial insurance, as observed in this community : The total amount paid in claims to relatives of deceased policy-holders has now reached nearly $4,000,000. The benefit derived from these pay- ments is incalculable, because it may be said that in many, if not in the* majority of cases, these policies were the only available asset which the relatives of the deceased had at the time of their death. That the masses are coming fully to realize the great value of Industrial insurance in a strong, reliable company is shown from the fact that The Prudential has now about 900,000 policies in force. They paid over 13,000 claims in 1898, 178 HISTORY OF THE PRUDENTIAL. The Prudential had not only made many friends from the beginning, but it had never forfeited the good-will of any one thoroughly familiar with its obj ect and results as an agency for the improvement of the condition of the industrial population. This view is fully and ably set forth in a lengthy article on the Company's business operations during the year 1888, in the Baltimore Underwriter of January 21, 1889, from which I make a brief extract, as a further proof of the increasing public approval of the Prudential form of life insurance in America : While The Prudential is thus showing what can be done by intelligent and energetic effort in the upbuilding of a great providential institution, it serves at the same time as a leading exponent of a system most admirably adapted to the special needs of the industrial classes. It is teaching with all the force of a singularly successful example ; it is educating the wage- earners of the country to the importance of thrift and the cumulative value of small savings ; it shows them how the benefits of life insurance can be brought to their own doors, and be made available and secure for them, no matter how humble their means or how enforced their economy. Before the introduction of the industrial system, the largest class in every com- munity, the class more than all others needing the protective care of life insurance, was practically denied its advantages. Thousands, through the convenient methods and the ready adaptation of The Prudential, have real- ized the value of its help in time of need, and they in turn naturally advertise it among their friends, and make its name a familiar household word. Another clear and comprehensive expression of approval on the part of a public journal not connected with insurance inter- ests, but which had been among the first to recognize the impor- tance of extending the principles of life insurance to the masses, is to be found in the Boston Herald of September 2, 1889. From along article on the subject of Industrial insurance and "how the poor may provide a burial fund," I make the following extracts, as a further illustration of the increasing intelligent recognition of the methods and results of life insurance on the Industrial plan : One of the most surprising developments of modern life insurance is in the direction of what is called industrial or burial fund insurance. This ^feature, which is of comparatively recent growth, has been forced upon the insurance companies by the necessities of families of small means. Its primary object is to provide a modest sum for funeral expenses, and is radi- cally different from ordinary life insurance. This class of insurance may be called A GROWTH OF THE TIMES, and the increasing demand for it is one of the most encouraging features in the THE PRUDENTIAL INS. CO. OF AMERICA, iSSQ-'QI. 179 industrial world at the present time. But a few years ago it was nearly im- possible for one to obtain a policy of insurance for less than $1,000. Few companies would grant insurance on the lives of women, and no company would insure children. Up to the time of the introduction of the plan of industrial insurance into this country, the average amount of life insurance policies in force in the United States was $2,500. The efforts of most com- panies were, and still are directed toward securing large individual risks, and the manner in which the heavy risks that have been placed in recent years are exploited shows the estimation placed upon this class of business by insurance companies. Not only were policies of less than $1,000 seldom issued, but premiums were not accepted oftener than quarterly. Naturally this high cost of insurance cut off from participation therein those who most needed the protection. In fact, the vast majority of the community were unable to procure insurance, and would have been unable to pay the pre- miums, even if secured. To them, policies for small amounts with fre- quent payments of premiums are a necessity. This need was supplied by the scheme of industrial insurance, the plan for which has been largely drawn from English sources. Among the objections that have been raised against industrial insur- ance at various times has been that of the temptation to infanticide ; but this argument has been so frequently met by official statistics and reports from English and American sources, that only the ill-informed now hold or ad- vance such theories. The plan early adopted by the companies, and uni- formly pursued since, of granting an increasing insurance for a uniform period, so that as the child advances in years the benefits increase, reach- ing the maximum at about the age when the child becomes a possible wage-earner, and thus a contributor to the family funds, has done much to lessen any possible danger that might come from this direction. As a mat- ter of fact, the cases of infanticide for the sake of insurance money are ex- ceedingly rare ; indeed, much more uncommon than similar cases in ordi- nary life insurance, where the temptation is greater. Another criticism is based on the great number of policies lapsed. The critics evidently forget that the conditions are radically diiferent from those attending ordinary life insurance. So many things affect the connection of the policy-holders with the companies, such as the great variety of ages, the small incomes of those who carry the insurance, and the fact that these incomes are liable to sudden shrinkage or entire loss. All these causes, and many others which might be named, have so much effect upon the question that it is not strange that the ratio of lapses should be very large. Other objections raised are the trifling amount of benefit paid and the lack of insurable interest of the parents in the lives of children, who com- pose the bulk of the risks exposed. But these objections are answered by calling attention to the fact that the benefit is intended to be only of the nature of a burial fund, that it is as large as the one carrying the insurance can afford to pay premiums upon, and that the desire of a parent to properly and decently bury a dead child, without relying either upon public or pri- vate charity, may well be a substitute for an insurable interest. l8o HISTORY OF THE PRUDENTIAL. The dangers which are connected with this plan of insurance, so far as the policy-holders are concerned, are largely those which are inseparably con- nected with insurance of whatever nature. From the little paper printed for The Prudential Insurance Company, and from other industrial insurance literature which is accessible, it appears that the industrial companies endeavor to minimize the lapses as much as possible ; they help the member avoid them by granting him a grace, so that every little disturbance may not invalidate his insurance, and they make it a vital consideration to the agent to make the lapses as small as possible. The idea adopted seems to be that "a busi- ness worth doing is worth keeping." A member never secedes, the reve- nue from whose policy a company would not far rather have maintained, for the lapses are not on business which has been in force for a few years, but upon business in the early stages of its existence before it has covered expenses or yielded any margin of surplus. Insurance Commissioner Merrill has the following to say of the indus- trial business in his report for 1889: "This branch of life insurance, com- paratively new to this country, has had in other lands a development which best attests the public want thereby met. That it has its limitations and its dangers its most earnest advocates attest, but there is a field within which it may properly, and with careful restrictions, commendably work." Too much credit can not be awarded to those companies that have, in the face of innumerable obstacles, carried the blessings of life insurance to the poor and lowly, and made it possible for even the women and children to share in the advantages of the indemnity it secures. To these words of approval and advice little need be added in further explanation. It would be well, indeed, for the best interests of the people if public journals would at all times give as fair and open an expression, supported by official and other proof, of matters affecting directly the interests and welfare of the wage-earners of the State ; but, unfortunately, very often sensa- tional newspapers will try to discourage public confidence in financial institutions by ill-advised criticisms or unwarranted assertions. It is something very considerably to the credit of the Boston Herald that it maintained consistently its attitude in favor of workingmen's insurance for so long a period as from 1853 to 1889. The success of The Prudential was, no doubt, largely respon- sible for the organization of a new Industrial insurance company in the city of Newark during the year 1889, under the name of The United States Industrial Insurance Company. What has been said of The People's Insurance Company of Norwich applies equally well to this company, which, after struggling against enormous difficulties extending over a period of a little more THE PRUDENTIAL INS. CO. OF AMERICA, 1889-^91. l8l than eight years, withdrew from the business and reinsured its risks, under date of June 24, 1896, with the Metropolitan Life Insurance Company of New York. As it was well pointed out at the time, it is not only an ex- ceedingly expensive matter to establish an Industrial insurance company, but practically an almost impossible undertaking in view of the great difficulty in obtaining the required body of men able to manage local agencies with even a fair degree of success. As a rule, new Industrial companies in the beginning unwisely attempted to obtain their agents and managers from the existing Industrial companies, who, in turn, would attempt to "twist" policies by transferring business from the older companies to the new, this in turn leading to inter-company warfare, which natu- rally caused strife and bitterness and unnecessary waste of money, to which must be added a not inconsiderable degree of hindrance to the development and best interests of the companies and their policy-holders. Other companies have been started since that date, but, as a rule, their early experience has been very much along these lines. Thus, during the same year, an Industrial company was organized in Cincinnati by the name of the West- ern and Southern, which also, at first, for a short period at least, gave considerable trouble to the agents of The Prudential. After a while, however, these difficulties were overcome, and the West- ern and Southern has now quite a large number of policy-holders in some of the principal cities of the Middle West. The business operations of The Prudential during the year 1889 had been exceptionally successful, and at the close of the year the Company had 1,099,312 Industrial policies in force for the sum of $i 17, 357, 415 of insurance protection. The premium income during the year had reached the, for the time, enormous sum of almost $4,500,000, while the amount paid in losses was $1,300,000. The net gain in Industrial insurance during the year had been 249,248 Industrial policies, or equal to 29.3 per cent, increase over the preceding year. In Ordinary insurance the Company had made considerable progress, doubling the number of policies, the increase being from 915 in force at the close of 1888 to 1,839 in force at the end of 1889. Corresponding gains were made in assets and surplus, indicative of the healthy and solid growth of the Company during the year. The progress of the Company, in both departments of the business, continued during the year 1890. An important step in lS2 HISTORY OF THE PRUDENTIAL. advance was made during this year, in that a concession was granted to the policy-holders by the addition of a five-year divi- dend provision to the holders of Special Adult policies. In a general way the year was rather an uneventful one from an insurance standpoint, and the only matter deserving of more than passing notice was an attempt in the State of New York to prohibit the insurance of children under ten years of age. A bill to this effect had been introduced and referred to the Com- mittee on Insurance, which gave an extended hearing to both sides of the controversy, and I can not do better than quote the following passage in reference to the subj ect from the Spectator of March 13, 1890 : The insurance committee of the Legislature has given a hearing to those who are interested in the bill recently introduced to prevent the assurance of the lives of children under ten years of age, or what is more usually termed infantile assurance. There have been at various times attempts made to excite public distrust of this kind of assurance by the cry that such assurance is an incentive to child murder. This cry has been sounded more frequently, however, in England than here. Inquiries offi- cially made in England have shown that there is very little basis for the truth of any such statement. While it is possible that occasionally depraved and dissolute parents have been led to commit child murder for the sake of a small amount of assurance, yet such cases are so rare as to amount to nothing when the large number of children so assured is con- sidered. We do not believe that in this country it would be possible to substantiate a single case of child murder as resulting from this cause. On the contrary, however, it could be abundantly shown that infantile assur- ance has done a world of good among the poorer classes. Thousands of children are assured in the various industrial companies for small amounts, and this is regarded in the light of a burial fund, to secure for the child in case of its death a decent Christian burial. There is nothing the poor so dread as the possibility that they or their children may be buried in Potter's Field or by the hand of charity. Next to the poor-house a pauper's grave is their greatest aversion. They therefore hail with alacrity this form of assurance, which provides a burial fund for themselves and their children, and they will pinch and starve themselves, almost, in order to keep this assurance alive by the payment of the small weekly sums required. The agents of the industrial companies tell many a pitiful tale of the privations that poor families endure rather than default in the payment of the pre- mium which secures them this fund to save them from a pauper's grave. It is so small on the average as to preclude the possibility of its being a temptation to them to commit murder, much less a murder of their own offspring, but is sufficient to secure Christian burial in case of death. President Dryden, of The Prudential Insurance Company of Newark, and Vice-President J. R. Hegeman, of the Metropolitan, with others representing 'XjBRAflp' o*- -fait UNIVERSITY &* / THE PRUDENTIAL INS. CO. OF AMERICA, iSSg-'QI. 183 industrial assurance, have appeared before the committee and given such explanations as will probably result in the defeat of the bill. Cer- tainly there is no occasion for any such measure, depriving so many thousands of this highly -prized form of insurance, until there is some evidence that it has been abused, as has been so frequently suggested but never proven. The Legislative Committee was evidently impressed with the plain statement of the facts as presented by the Industrial com- panies, and after a full hearing no further action was taken. It was only a few years later that complete legislative sanction was given to the business by the incorporation of a table into the new insurance code of the State, fixing the maximum amounts which children under thirteen years could be insured for, in a manner practically identical with the methods of The Prudential and other Industrial companies. Daring the year an epidemic of la grippe caused an exces- sive mortality among the general population and proved a serious drain on the funds of the Industrial companies. A large num- ber of claims due to this cause were paid by The Prudential, and corresponding relief was afforded to large numbers who would otherwise have been compelled to rely upon public or private support for the payment of medical and funeral expenses. A new Industrial company was organized this year at I/ouis- ville, Ky., under the name of the Sun L,ife, by Mr. M. W. Adams, formerly connected with The Prudential Insurance Company. The new company was, from the beginning, under energetic management, and has succeeded in making a success of the busi- ness, especially among the white population in the Southern States. A vacancy having occurred in the position of Secretary, Mr. Forrest F. Dryden, only son of the President of the Com- pany, was this year, under date of October loth, elected to the identical position so ably filled by his father from the commence- ment of the Company's business operations to the date of his election to the Presidency. For the purpose of obtaining a thorough training in the field service of the Company, Mr. Forrest F. Dryden entered one of the Company's districts as an Inspector under date of October 4, 1888, and in the usual course obtained his promotion to a Superintendency under date of Feb- ruary 4, 1889. Having shown unusual executive ability, Mr. Dryden, on January 14, 1890, was advanced to the position of Assistant Secretary, and, on October 10, 1890, elected to the 184 HISTORY OF THE PRUDENTIAL. responsible position of Secretary, which office he holds at the present time. At the close of the year 1890 The Prudential had 1,228,332 Industrial policies in force, insuring to the industrial popula- tion an amount of protection in excess of $135,000,000. The financial condition of the Company was excellent, the surplus having been increased to $1,343,874. The relative increase in business had been less than during the preceding years, partly on account of the continued efforts on the part of new Industrial companies to interfere with the business of The Prudential by improper methods and unfair competition. These difficulties, however, were gradually overcome as the nature of the business and the elements of success were becoming more thoroughly understood by new organizations entering the field of Industrial insurance. As an evidence of the efforts on the part of the managers of The Prudential to do complete justice to their policy-holders, as well as to the agents of the Company, a new scale of terms to agents was issued during the early part of the year, indicative of the most careful consideration of all the interests involved in the complex question of adequate agency compensation. The table of Industrial rates was slightly altered in that weekly premiums in excess of twenty cents were accepted at the older ages, where occasionally a demand was made for a policy for a larger sum than could be insured for under the existing table of rates. Other- wise, the table of rates and benefits remained the same as estab- lished in 1887. During the year 1891 a number of legislative attempts were made to disturb the business of the Company and interfere with the practice of Industrial insurance, but, as a rule, the plain statement of facts supplied by the companies sufficed to meet the objections made against certain details connected with the business. Kfforts to prohibit the insurance of children were made in Illinois, Massachusetts, Ohio and New Jersey, but not one of the bills introduced for this purpose became a law. In New Jersey a further attempt was made to compel Industrial companies to grant surrender values after two years' premiums had been paid, while in the State of Illinois a bill was intro- duced to compel insurance companies to make their policies incontestable after six months. Neither of these efforts met with success, the view of the companies prevailing, that should THE PRUDENTIAL INS. CO. OF AMERICA, iSSQ-'QI. 185 experience warrant the adoption of such measures the companies, for purely commercial reasons, if for no others, would on their own account grant such privileges as the condition of the busi- ness would warrant. In a few States efforts were made to force Industrial companies to grant the same benefits to colored persons as those granted to whites, and in the State of New York a bill to this effect passed both houses of the Legislature. The Spectator of February 5, 1891, in commenting upon the pass- age of this bill, well said that "There will probably be less effort on the part of agents to write applications on colored lives," and further referred to the subject in the following well-timed remarks upon the bill during its early stage in the Assembly : A bill has been introduced in the New York Senate, having in view the prevention of discrimination by life assurance companies against persons of color, and is similar in character to that passed by the Ohio and Massachusetts Legislatures. Legislation of this kind is harmful in the extreme, because it defeats its own end, it being impossible to force any company to make a bid through its agents for colored risks, and so those persons, who would otherwise be able to secure assurance at rates equitably adjusted to the greater mortality which statistics show prevails among individuals of African extraction, are practically debarred from its advantages, because no agent will solicit them for assurance if his company is compelled to grant a contract in which the terms are so manifestly against them. The color line is not drawn simply because the applicants are negroes the world is too progressive for that but a distinction is made on account of the fact that companies can not afford to grant policies at the same rates to colored as to white applicants, and any legislation which is intended to force them so to do is practically tyrannous. Fire insurance companies are not prohibited from charging higher premiums on frame than brick or stone-built prop- erties, and yet they are in just the same position as life assurance companies that adjust the difficulty of increased mortality amongst negroes, by fixing a rate at which they can safely, and with equal chance of profit as from whites, grant them assurance. There is no more sense in passing such a bill as referred to than there would be in passing one to prevent life assurance companies rejecting applicants who were consumptives. The business year of 1891 had been satisfactory to the man- agers of The Prudential, showing a fair increase in the Ordinary branch, while in the Industrial branch 1,360,000 contracts were in force at the close of the year. The Company was taking its time in the writing of new business, more serious attention being given to the improvement of the condition of the business l86 HISTORY OF THE PRUDENTIAL. already on its books. This, in the practice of Industrial insur- ance, is a most important factor and element of success, and no Industrial company has shown more solicitude towards its per- sistent policy-holders than The Prudential, and to the Company's sense of equity and fairness must be attributed a large degree of its wonderful success not only during the early years of business operations, but much more so during more recent times. THE; PRUDENTIAL INS. co. OF AMERICA, i892-'93. 187 CHAPTER XII. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, 1892-1893. The new year 1892 was destined to prove a most important one in the annals of Industrial insurance. The Prudential Insur- ance Company this year issued a new Industrial policy, which contained a provision granting paid-up insurance to its policy- holders after the premiums had been paid for a period of five years. A circular letter to the agents and policy-holders explain- ing this voluntary concession on the part of the Company was issued under date of January i, 1892, from which I make a brief quotation : The first of our new Plans is the addition of a Paid-up Policy Clause to the present forms of Industrial contracts. The paid-up clause will be oper- ative after five years' premiums have been paid on the original policy. The amount of the paid-up policy at the end of a certain number of years is plainly indicated in a table which will be printed on the back of each Industrial policy issued after the first of January, 1892. The amounts in the table are computed according to the New York Non-forfeiture Law, which is used by the New York State companies in computing paid-up policies under Ordinary Whole-Life contracts. The paid-up policy, as its name indicates, is not subject to the payment of any premiums, and will be paid in event of the death of the person insured, provided it occurs within the period of his (or her) Expectation of Life at the time the paid-up policy is taken out. The Company has further to announce that all policies at present out- standing will be entitled to a paid-up concession, after five years from this date ; or, in other words, whether they contain a paid-up clause or not, will be entitled to a paid-up concession. In commenting upon the liberal policy of The Prudential, the Insurance Monitor, under date of January 2, 1892, voiced the unanimous opinion of the insurance press in the following words : The opening of the new year marked an important step in advance in industrial insurance. To the Prudential must be given the credit of 1 88 HISTORY OF THE PRUDENTIAL. inaugurating the new departure. Hereafter surrender values in the form of paid-up policies will be granted to all applicants above the age of thirteen whose contracts have run for five years, such policies to run for the term of their life expectation. The great importance of this voluntary concession lies in the fact that it anticipates and effectually meets what might, in the near future, prove a serious menace to the business. Industrial insurance has its stronghold among the masses, whose political influence is all powerful. Sooner or later a legislative agitation would have been started in the ostensible interest of the poor man to compel surrender values. The matter would have been in the hands of incompetent legislators, whose notions of surrender values would be in all likelihood damaging to the best interests of the business. The action of the Prudential will almost inevitably be followed by the rest, and there will be no occasion for legislative interference. In fact, since writing the above we have learned that the Metropolitan and one or two other companies expect to take a similar step. But we suggest to all the companies that they act in harmony in this matter. Industrial insurance is still in its early stages, and it would be exceedingly unwise to inaugurate a competition as to which can promise the largest benefits to be piled up as a future liability. I can not omit a further tribute to the Company and its liberal policy towards its policy-holders, as additional evidence of the ready recognition of The Prudential's sense of justice in dealing with its patrons, and its sense of prudence in dealing with a problem which required for its successful solution and settlement not only the highest actuarial skill, but also an experience which could be furnished only by the actual business operations of the Company. The following reference to The Prudential appeared in the American Exchange and Review of April, 1892, having been copied from the Philadelphia Intelligencer : It appears to have been a very difficult matter to introduce the feature of surrender values in industrial life insurance in this country. In the first place, the amounts of the industrial policies are so small that even the most liberal allowances as surrender values would be represented by such insignificant amounts of paid-up insurance, or for so short extensions to the life of lapsed policies as to leave but very little life insurance benefit remaining to the assured. But the principal difficulty in this matter, no doubt, has been the exceedingly high proportion of cost that must accom- pany the granting of surrender values or extensions in industrial life insur- ance. The trouble and expense consequent upon extending the time or in granting paid-up surrender values on a policy for but $50, generally speak- ing, is as great as for a policy of $50,000 ; from this it can be judged that, while the ratio of expense attending surrender values, etc., in a business of policies for large amounts is hardly appreciable, yet such similar amounts THE PRUDENTIAL INS. CO. OF AMERICA, 1892-^93. 189 of expense attending the granting of surrender values, etc., on the exceed- ingly small amounts in industrial insurance, would pretty much swallow all up in the cost. Nevertheless, industrial insurance in itself is possibly the greatest, as it is the grandest representation of the important results that have been obtained by " attention to small things " ; so, on this very account, it has looked something like a reproach against the industrial life insurance companies that they have not granted surrender values or extensions on lapsed policies, no matter how small such paid-up amounts or how short the periods of the extension of the life of the policies these concessions would result in. However, The Prudential Company of Newark, with its twenty years of the largest experience as to the possibilities of industrial insurance, has carefully considered the difficulties of granting surrender values in this branch of the business, and finding, in its case at least, this concession could be made to its patrons, has incorporated it in all its policies of five years' standing ; and if this may be considered a long time before a surrender value can be earned, nevertheless this action of The Prudential is exceedingly valuable as an example that no doubt will be influential in bringing about, in the industrial branch, the study and allow- ance of all that can be permitted in this important matter, and therefore it is due the ' ' Prudential ' ' that it should be given all the credit belonging to the industrial company first to introduce the important feature of ' ' sur- render values " in the industrial life policy. Still another decided step in advance was taken this year by The Prudential, in that an Industrial Endowment policy was placed on the market, reference to which was made in Mr. Dryden's letter of January ist, as follows : The second departure is the addition of Endowment Policies to the forms of contracts now issued by the Industrial branch of the Company. Policies will be issued payable at the end of 15, 20, 25 or 30 years, or at death, if prior to the end of the period selected. Circulars are sent you herewith, showing the amount of the policy that may be purchased by a certain weekly premium. Endowments will also be entitled to paid-up policies after five years' premiums have been paid. The amount of the paid-up will be in propor- tion to the number of premiums paid on the policy. For example, if the Endowment is for $1,000 and for 15 years, the paid-up policy after five years will be for one-third of the face value of the policy after ten years, for two-thirds of the face of the policy. The question of Industrial Endowments had been discussed for a number of years in the insurance journals, but it was one which required for its proper treatment years of experience. The subsequent experience with this class of policies has proven that Endowments, in the true sense of the word, and in a practical HISTORY OF THE PRUDENTIAL. form, are hardly possible under the existing conditions of the Industrial method of insurance. In Endowment insurance a large part of the premium represents an investment feature, which can hardly find a place in an Industrial policy, providing first for the payment of funeral expenses and the cost of the last illness. The increased cost of Endowment insurance must neces- sarily at all times prove a serious hindrance to success, while, on the other hand, it may be argued that it is not desirable that the primary purpose of Industrial insurance should be defeated by a secondary one, which would often be the case were the amounts receivable to be paid to the insured during his or her life-time, and which, being small, would rapidly be consumed for living expenses, leaving little or nothing at death to meet the cost of burial and last illness. Immense and permanent progress had been made in the ex- tension of insurance principles to the masses. Millions were now insured who, previous to the advent of Industrial insurance, had not even a conception of insurance principles and practice, and millions had been provided for by a policy adequate to meet the objects for which the business had been established. Few writers on Life Insurance Progress have recognized this development of life insurance more clearly than Mr. D. N. Holway, who, in an article in the Arena of 1892, referred to Industrial insurance as follows : It forms the A, B, C of American Life Insurance. All the members of a family insure each for a small amount secured by weekly payments. In this way they mutually protect each other. The amount of death claims paid under this form of insurance in 1891 was $7,725,000 upon 63,900 policies. Aside from the direct and incalculable benefit which the bestowal of this large amount among so many households afforded, the educational process whereby this vast number of people (over 4,000,000) are taught the value of self-sacrifice for the benefit of others, and to fully real- ize that there is a system whereby they can surely do it, is of immeasurable value to the future of the republic. Instead of being a blind force of un- educated power, they become conservatives because they represent prop- erty.* They range themselves on the side of law and order. To many of them is thus exemplified for the first time the beautiful sentiment that * It may not be out of place here to recall a passage in Mr. Mackay's book, ''The Knglish Poor," in which this tendency of the wage-earning masses towards economic independence is fully and ably set forth: "The first lesson in thrift, the first inducements to rely on property, the first PRESENT HOME-OFFICE BUILDINGS OF THE PRUDENTlAlv INSURANCE COMPANY OF AMERICA FIRST OCCUPIED, MAY I, 1892. THE PRUDENTIAL INS. CO. OF AMERICA, 1892-9$. IQI has come down the centuries, "Bear ye one another's burdens," and they find pleasure in expressing it in this practical way. As these persons rise in the social scale and become supervisors, inventors and proprietors in the world's great affairs, they will increase their insurance, and thus become patrons in an enlightened sense of the companies which practice the ordi- nary methods. There is therefore no clashing of interests between the two plans of conducting the business, but rather a mutual helping of each other forward toward an ever enlarging success. Largely no doubt in consequence of the liberal concessions made to its policy-holders and the consequent material improve- ment in the Industrial contract as a permanent form of insurance protection, The Prudential made exceptional progress in new business during the year 1892. The net increase in Industrial poli- cies in force reached almost 300,000, equal to 21.6 per cent, over the preceding year. The total number of Industrial policies had reached 1,653,465, while in the Ordinary department 8, 120 policies were in force. In the finances of the Company corresponding progress had been made, and the surplus to policy-holders now ex- ceeded $2,200,000. The successful ending of the year's business operations proved a fitting climax to the removal of the home office from the building which it had occupied since 1883 to the new home-office building on the corner of Broad and Bank streets. Unknown as a business method less than seventeen years before, The Prudential had developed Industrial insurance to such an extent that by 1892 the largest office building in the State of New Jersey was required for transacting the business of the Company. In honor of the event a celebration took place during the latter part of November, referred to in the Standard of Boston, under date of December 3, 1892, in the following words : The Prudential Life Insurance Company of Newark gave a treat to its agents located within a radius of 100 miles of the home office Thursday and Friday. The affair was in the nature of a house-warming, the first since motives to refrain from consuming wages on the day they are earned, arise from the desire of men to provide against the uncertainties of an unknown morrow, and for the inevitable period of sickness and old age. Our poor law and the ubiquitous philanthropist have done their best to prevent the poor man from the necessity of yielding to this desire. * * * * But the individualistic instinct is not so easily killed, and notwithstanding the snare, there is among the poor a latent, steady and withal effectual tendency to return to the true type of individual independence and self-assertion." (P- I3-) HISTORY OF THE PRUDENTIAL. the Company's building on Broad street had been occupied. The festivities were inaugurated with a banquet at Delmonico's Thursday night, at which all the officers and their immediate attaches participated. The influx of agents did not begin from the suburban districts until yesterday morning, and by n o'clock there were fully two thousand sta- tioned in front of the Broad street edifice, having been brought to the city by the early trains. The insurance excursionists were primed for a good time, having fine military bands with them that served to arouse all Newark within a distance of three miles of the Prudential office. After an inspec- tion of the building, during which President Dryden addressed the visitors from the monster balcony within that overlooks the entire office on the ground-floor, the agents were ordered to fall in and the march was taken up to Saenger-Fest Pavilion in Caledonian Park. On the way they were reviewed by Mayor Haynes. The agents sat down to an elaborate ox-roast on reaching their destination. Another speech was made by President Dryden at the park after the repast, and the delegates returned to their homes in the evening pronouncing the affair a monster success. The proportions which the business of The Prudential had assumed by January i, 1893, made it not only desirable but necessary that the capital stock of the Company should be con- siderably increased. Accordingly during the early part of the year new stock was issued, which increased the capital of the Company to $2,000,000. In compliance with a distinct demand the Company this year through its Ordinary department placed a Child's Endowment policy on the market, to enable parents to make a provision for the education, support or assistance of children at the age of eighteen years and over. Similar efforts had previously been made in this direction in this country, but no substantial results had been attained. As far back as 1853, Dr - H. J. Tilt had discussed the question of life insurance for children at consider- able length and furnished tables of rates which, no doubt, were adopted by some of the companies transacting insurance at that time,* but the inherent difficulties in making Child's Endowments applicable to the Industrial population are such that it is doubtful whether this form of insurance is ever likely to become very popular in this country. The Child Endowment policies of The Prudential are issued for sums as low as $100, with premiums payable quarterly, semi-annually and annually. * Elements of Health, and Principles of Female Hygiene, pp. 134, 135. Lindsay & Blakiston, Philadelphia, 1853. THE PRUDENTIAL INS. CO. OF AMERICA, l892-'93- 193 CHILD'S ENDOWMENT. (WiTH INTEREST.) PREMIUM RATES PER fioo. Amount of Policy -with profits payable at age stated, and all Premiums returned WITH FOUR PER CENT. COMPOUND INTEREST in event of previous death. PAYABLE AT AGE 18. AGE NEAREST BIRTHDAY. ANNUAL. SEMI-ANNUAL. QUARTBRLY. I $5 08 $264 $ 35 2 5 49 285 i 46 3 5 96 3 10 58 4 6 50 338 72 5 7 12 3 70 89 6 7 85 4 08 2 08 7 8 71 4 53 2 31 8 9 75 5 07 258 In the event of the death of the child before the expiration of the Endowment period, all the premiums paid on the policy are returned to the parent or guardian with compound interest at the rate of four per cent. In compliance with a request from the United States Review of Philadelphia, Mr. Dry den this year contributed a valuable and interesting paper on " Industrial Insurance as an Educator," The article is too long to be reproduced in full, but the essential points are brought out in the following quotations : Industrial insurance does not cease its efforts for the education of the people at the time when the policy is taken, for it must be remembered that the premium is not sent to the Company by the insured, but that the agent calls at the house of the policy-holder week after week. This tends to keep the subject before the mind, and very frequently questions are asked and the subject is broached by neighbors who are calling at the time the collector is announced, and, moreover, the literature of the Company is left regularly as the agent calls, so that the person is kept informed in regard to the various phases of life insurance, the different arguments for it, illustrations of its value, and also of the disadvantages of being without it ; so that the tendency is to continually deepen the impression which was made at the time the policy was taken. One feature of this work merits particular attention, namely, its effect upon the young. In consequence of the industrial agent's work, boys and girls grow up in an atmosphere of insurance. They come to look upon it 194 HISTORY OF THE PRUDENTIAL. as a matter of course ; to think of it as something to be provided, the same as every other necessary of life, regularly arid constantly. They hear the subject discussed by their parents after the agent has called ; they know when a decision is reached and in many cases understand that it involves self-denial, and they appreciate its importance accordingly. They see the policy and premium receipt-book and know what they are ; and they see the money paid out. In answer to innumerable questions the parents explain to them the reasons for the outlay and the advantages of it ; and this is done, not in the parlance of the agent, but in the language of the parent, which is the expression of a mode of thought very little different or but slightly removed from that of the child. Thus, the boy or girl involuntarily and intuitively imbibes insurance. It may be said that this process of education is confined to a certain class, and that it is circumscribed in its influence ; that it works amongst those whose surroundings, mode of life and limited sphere in which they move make it impracticable, if not impossible, for them to do much towards extending the education thus gained. This is not the country in which to hold such a theory. It is here that the poor boy of to-day becomes the millionaire of a few years hence ; that the cabin of the canal-boat is exchanged for the White House, and the rail-splitter becomes President. The history of this country teaches, as clearly as anything else, that the masses amongst which the work of Industrial insurance is done produce many men who are a power in society. There are boys who are now in families where industrial policies are held, some of them carrying insurance on their own lives, who are fast approaching the editorial chair, and it will not be very long before some of those who are now taking their first lesson in insurance from an industrial policy and premium receipt-book, will be seated in the State Legislatures or in the halls of Congress. This view of Mr. Dryden is fully supported by the increasing popularity of the system of Industrial insurance among the new generation who have become familiar with this form of insurance during their earliest infancy, and perhaps in no case has the educational value of Industrial insurance been more fully recognized than in the article of Mr. Holway in the Arena, where he properly refers to it as the "A, B, C" of American life insurance. These views found their further support in the very con- siderable progress that had been made by Industrial companies in the Ordinary field. The larger proportion of Ordinary risks on the books of Industrial companies represent a class of people who would not generally be solicited by the agents of regular Ordinary companies. To illustrate this fact I may state that the average amount of an Ordinary policy written by the three leading Ordinary life companies during 1898 was $2, 138 against an THE PRUDENTIAL INS. CO. OF AMERICA, l892-'93- 195 average policy of only $1,120 written by The Prudential in its Ordinary department. That this extension of Ordinary insurance principles to the masses is the direct result of Industrial insurance will not be questioned by any experienced life underwriter. The commercial and financial depression of the year 1893 brought about such widespread distress among the wage-earning population in consequence of the numerous failures and the stop- page of work in a large number of industries that it was but natural to expect that, among those insured with Industrial companies, many would find it difficult to pay the weekly premiums on their Industrial policies. As soon as the gravity of the problem became apparent, steps were taken by The Prudential to miti- gate the inevitable distress as far as it was possible for the Company to do this in justice to the best interests of all the policy-holders and the future welfare of the Company. Accord- ingly, under date of November i, 1893, a circular letter was issued by the Company over the signature of Mr. Dryden, in which lapsed policy-holders were granted concessions without a parallel in life- insurance history. The circular letter is referred to at length in an article, in which the most important sections were incorporated, in the Baltimore Underwriter under date of November 20, 1893, and which I therefore quote in full : Under the operation of the forfeiture system in case of lapses of policies for non-punctual payment of premiums, so much hardship was occasioned, that the life companies were forced by public complaint to adopt more liberal measures. Enforcement of the stipulations of an iron-clad contract, though strictly legal, was not considered by the sufferers as even-handed or equitable. It might be just, but it was anything but generous. Hence the non-forfeiture features which have been conceded from time to time, and which have abolished the provisions and restrictions to which reason- able objection was made. In line with this growth of liberal spirit, and in view of the straitened and pinched condition of the great army of the unemployed during a long period of financial stringency, of closure of mills and factories, and of strikes against reduction of wages, The Prudential Insurance Company of America has issued a very important and noteworthy circular, a copy of which will be found on another page. The constituency of industrial in- surance is mainly drawn from the humble classes of life, to whom in a period of non-employment the payment of five or ten cents a week out of slender savings may mean serious privation. When the savings are ex- hausted and no wages coming in, they are obliged to lapse their policies, and lose thereby the provision made for the rainy day. With the experi- ence before them of such sad results of hard times, the managers of the 196 HISTORY OF THE PRUDENTIAL. Prudential have come forward to befriend distressed policy-holders in the most effective way. Three concessions are made as follows : 1. If the policy has been in force as an "adult policy " for five years or more at the time premiums ceased to be paid, a paid-up policy will be granted in accordance with the terms and conditions of the provision for paid-up policies published on the back of " regular industrial " policies now issued by the company. 2. In lieu of the foregoing, policy-holders who have paid premiums for one full year or more at the time of lapse may take out a new policy at the present age, and the same will be p.ut in full immediate benefit. 3. Proofs of death may be filled out and submitted in the usual way in any case of death happening between June ist last and November 6, 1893, if policy has been in force for five years or more on the life of the insured and has been lapsed since June ist last, in consequence of the hard times. If the claim is correct in every respect, except with regard to the policy being lapsed for the cause aforesaid, it will be recognized and paid in ac- cordance with the terms and conditions of the provision for paid-up policies heretofore referred to. These offers of restoration will not only be welcome to the thrifty on the lapse list, who can ill afford to lose what they have paid in, and who feel keenly such deprivation of the provision against future contingen- cies, but they will be hailed with satisfaction by all who are interested in the successful working of the industrial insurance system, which they regard as virtually and substantially the best form of " organized charity " yet devised. Not the least in gratitude to the managers will be the field workers, for the double reason that it will give them especial pleasure to engage in the work of restoration, and that it will give them a handle and im- petus in canvassing for new business, the value of which is beyond estimate. The value of these important concessions can not be esti- mated in mere dollars and cents. It far exceeds the actual cost of these concessions to the Company which was liberal enough to make them, for they have done much, if not most, to make clear to policy-holders and the outside world that, although The Prudential is not a charitable or philanthropic agency in the sense that these terms are usually understood, it is nevertheless a Company ready to deal liberally and equitably with its policy- holders to the extent of its ability in an hour of emergency or need. It would be easy to fill pages with letters of gratitude which reached the Company in large numbers, expressing the appreciation of those who, contrary to their expectations, did not forfeit their insurance in consequence of the critical times during the latter part of 1 893 and the early part of 1 894. I can not do better than quote from the New York Insur- ance Journal for November, 1893, tne statement that "When THE PRUDENTIAL INS. CO. OF AMERICA, l892-'93. 197 we consider the magnitude of the concession, which may embrace many thousand policy holders, so widespread is what we may term industrial idleness, that the proposition may be well de- scribed as unexampled in the history of life insurance, and probably reaches that extreme of security that is compatible with the fundamental principle upon which the institution is founded , that of reproductiveness and self-support. But under the pressure of such circumstances, and in behalf of such a clientele, we question if sentiment would be open to reproach should it be found to have made a slight trespass upon actual foresight. ' ' At the time when the concession was made the Company hardly expected the financial stringency to continue as long as subsequent experience proved to be the case, and hence an ex- tension of the concession was made necessary under date of December loth, and communicated to the public and the field force in the following words : The first of the concessions of November i, 1893, gave to the holders of Adult policies on which the premiums had been paid for five or more years the privilege of applying for a Paid-up policy, in accordance with the terms and conditions of the provision for Paid-up policies printed on the back of the present Regular Industrial policies of the Company. Until further notice this concession will be continued by the Company. If ever an unwarranted charge had found its own refutation it was true in this case. The accusation which had so often been brought against Industrial insurance companies, namely, that they desired, encouraged and profited by lapses, was here disproved by the practice of The Prudential, which did all that in safety could be done to reinstate lapsed policy-holders and to make forfeitures, which could possibly be avoided, unnecessary by a prudent liberality. This view was so well expressed in an article in the Weekly Underwriter of November u, 1893, t^ at I can n t do better than conclude these references to the concessions of 1893 with the following quotation : No business can long endure which takes advantage of technicalities to grind the face of the poor. While life insurance can not be conducted without premiums, and while rules must be maintained which are known to be sound business rules in ordinary times, there are exigencies in the lives of individuals and corporations, when the highest regard for the welfare of each demands a temporary departure even from principles which are regarded as fundamental. Insurance companies do not thrive on the profits from lapsed policies, as many ignorant people suppose, but on the steady and long-continued payment of premiums. This is especially true of 198 HISTORY OF THE PRUDENTIAL. industrial insurance, where it takes years of hard work to build up a pay- ing business. It must be apparent to the careful student of Industrial insurance history that, from the date of the organization of The Prudential, Industrial insurance had not only made constant and material progress in the extension of its operations, but that there had also been a corresponding increase in the public appreciation of its beneficence, not only from the standpoint of the individual policy-holder, but also from the standpoint of the taxpayer and citizen interested in the diminution of public burdens. It is rather curious to observe that, in the face of these facts, attempts continued to be made to interfere with the legiti- mate functions of the business. While some of the most impor- tant attempts at adverse legislation have been referred to, others were made in different parts of the country, which, however, as a rule, proved equally unsuccessful. Wherever the business was widely known, as in New Jersej 7 , New York, Pennsylvania or Massachusetts, it was naturally only a question of publicity and argument to make clear the absurdity and iniquity of the unfounded charges against the business. A successful attempt at adverse legislation was made this year in a western State, where The Prudential had only recently commenced business operations, and where, therefore, an extended knowledge of the true objects and results of Industrial insurance was out of the question. A bill was introduced in the Colorado Legislature during the early part of 1893, at the suggestion of the Colorado Humane Society, to prohibit the insurance of children under ten years of age. A brief hearing was given before the Insurance Committee of the Legislature, and in response to a request for information, with special reference to the question of insurable interest, the following facts and comments were placed before the Com- mittee* : It may be asserted that a parent has no insurable interest in the life of a child. We contend that the industrial classes have the moral and legal * An interesting case bearing on this point was tried in Anderson, Ind., a few years ago, in which the value of a child's life, its earning capacity, etc., were brought to the attention of the jury in a suit for damages for fatal injuries. According to the court records the value of a child's life, at age four, was given as $149.50; at age seven, as $600; at age ten, as $980 ; at age fifteen, as $2,600 ; and finally at age eighteen, as $4,200. THE PRUDENTIAL INS. CO. OF AMERICA, l892-'93. 199 right to insure their children, for it is well known that these children con- tribute to the support of their families at very early ages, so early, in fact, that in New York, Connecticut, and other States laws have been passed making thirteen the minimum age at which children should be employed in manufacturing establishments. Meanwhile, they are supported, edu- cated, and taught a trade in that view. There is a just and reasonable expectation of advantage or benefit from the continuance of their lives, and it logically follows that a proper justifi- cation inheres in the parent to protect that benefit while his child is insura- ble, and before sickness, accident or other causes interpose. As to its legality, the highest tribunal in the land, the Supreme Court of the United States, has gone farther than is here indicated by announcing that " it is not necessary that the expectation of advantage or benefit should be always capable of pecuniary estimation, for a parent has an insurable inter- est in the life of his child, a child in the life of his parent, a husband in the life of his wife, and the wife in the life of her husband." In Warnock vs. Davis, U. S. S. C., it was held that " the natural affec- tion in cases of this kind is considered as more powerful, as operating more efficaciously to protect the life of the insured than any other consideration." Again, in re Phoenix I^ife Company vs. Bailey, U. S. S. C., it was held that " there is an insurable interest if it appears that the relation, when of consanguinity or of affinity, was such as between the person whose life was insured and the benefit named in the policy as warrants the conclusion that the beneficiary had an interest, whether pecuniary or arising from depend- ence or natural affection, in the life of the person insured." Unfortunately for the best interests of the people, the bill was permitted to become a law. Those who were most interested in its passage had no opportunity to express themselves and had no means whereby they could make public their views. It is true that the Insurance Department of the State expressed itself in favor of Industrial insurance, it is true that a number of the more intelligent and influential members of the Legislature argued fully the people's side of the case, but the fact that the business was new, that it was represented in only two or three counties of the State, and that the majority of the members were absolutely unfamiliar with the subject, outweighed the argument in favor of the companies' side of the case. How far the members of the Legislature were misled by foolish and absolutely untrue state- ments on the part of those who were not in favor of the bill is best illustrated by an article in the Denver Times, from which I quote the following passage : The system has been driven out of almost every city in the Union where it attempted to do business, and has drawn upon itself the sworn 200 HISTORY OF THE PRUDENTIAL. hostility of societies for the prevention of cruelty to children, since it has proved to be the cause of much abuse to youths of tender age. Not a word can be said in its favor, and much can be charged to its account as an open avenue to fraud and crime.* The system had not only not been driven out of a single city in the United States, it had not only never been prohibited in this country or in England, but, on the contrary, it had been rapidly extended into all parts of -the country, into Canada, into Australia and even into the Cape Colony of South Africa. Wher- ever the English people are developing industrial communities, this form of insurance, either in the form of Friendly Societies or of Industrial companies, is rapidly increasing in popularity and public appreciation. There was therefore no warrant for the statements made by the Denver Times, and they can only be explained as having been put forward for partisan reasons, Once on the statute book, the Colorado law naturally became very difficult of repeal, and, though an effort in this direction was made during the session of 1899, to which reference will be made further on, the attempt failed because of the work of a small minority, who once more had neither public opinion nor a single iota of fact to support their antagonism to the business. A very interesting and valuable contribution to life-insur- ance literature was made this year by Dr. Edward H. Hamill, the Medical Director of the Company, who, at the Insurance Congress of the Chicago World's Fair, read a paper entitled ' ' Observations Regarding Risks Declined by The Prudential Insurance Company of America, 1888-' 92." By an entirely novel and original method, Dr. Hamill had succeeded in keep- ing a record of the mortality of rejected lives in the Industrial department of the Company's business, and for the first time in life-insurance history actual information pertaining to this class * A still more pertinent illustration of the perversion of facts pertaining to the business of Industrial insurance, on the part of those who are op- posed to the insurance of children, is to be found in the Seventeenth Annual Report of the American Humane Association, where it is stated that The Prudential Insurance Company had children insured in Colorado for sums as high as $25,000. As a matter of fact the Company had not then and has not now a single policy in force, on a child under ten years of age, for one- hundredth part of the sum mentioned. THE PRUDENTIAL INS. CO. OF AMERICA, l892-'93. 2OI of risks was supplied for a number of cases large enough to warrant the conclusion that the medical examination of Indus- trial risks was sufficiently accurate and satisfactory to protect the best interests of the Company. The Prudential Insurance Company is the only life company in existence collecting infor- mation of this kind, and the investigation having been con- tinued, the data are now much more complete and of greater determining value. 203 HISTORY OF THE PRUDENTIAL. CHAPTER XIII. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, 1894-1896. During the early part of 1894 The Prudential Insurance Company made an important change in its Industrial contracts, as to the amount of benefit payable during the first few months of policy duration. It had been the early practice of the Company to grant full benefit under Industrial policies after a period of three months of policy duration, but in 1877 this prac- tice was changed and the benefit was made one-quarter of the total amount of insurance when the policy had been less than six months in force. Subsequent experience proved that this provision was somewhat too liberal, largely because of the fact that a considerable amount of adverse selection was possible under the rules of the Company, by which at that time no medical examination or inspection was required on policies for less than $200. Accordingly, under date of October 6, 1884, a further change was made and no benefit was payable during the first three months of policy duration ; in other words, if the policy-holder died during the first three months, nothing was to be paid by the Company. After a little more than ten years' experience, it was once more decided to make a change by pro- viding a more liberal feature, and this year (1894) a provision was incorporated in the Industrial policy by which only one- third of the total amount of insurance insured for under the policy was payable if death occurred during the first six months of policy duration. This concession of an immediate benefit was a decided step in advance, since hardship often resulted in cases where death occurred during the early period of policy duration. Due largely, no doubt, to the many liberal concessions which had been made by the Company to its policy-holders, the year 1894 proved to be the greatest business year in the Company's THE PRUDENTIAL INS. CO. OF AMERICA, 189^96. 203 history. In consequence of the after effects of the panic of 1893, an increased proportion of the industrial population was forced to consider more seriously the question of a small life-insurance pro- vision against contingencies likely to occur at any time. Private charity, ever ready to help, assist and ameliorate the condition of unfortunates at the hour of death, is naturally very much re- stricted during years of panic and widespread financial or industrial depression. Hence, during 1894 large numbers who would otherwise have relied upon private charity or public sup- port realized the necessity of individual provision by life-insur- ance methods against the contingency of death, the expenses of the last illness and the immediate support of dependents. It had well been said by the Spectator, under date of March 22, 1894, that "The more the view of the Industrial companies being charitable organizations is advanced, the less likely are many people to take out policies ; for they would not accept charity and would resent the appearance of the agents if they had the wrong idea of the business. ' ' Neither The Prudential nor any other Industrial company ever attempted to create the impression among the industrial population that Industrial com- panies were charitable institutions. Rather to the contrary, the agents of the Company had, from the very beginning, preached thrift and independence to those with whom they came in contact in the discharge of their regular duties as canvassers and collectors. It is to these causes that I would attribute the immense suc- cess of the Company during the year 1 894, when under ordinary conditions a decrease in business should have been expected rather than an increase. In the Industrial department during the year 1894, The Prudential issued 1,696,847 policies for an aggregate sum of $205,128,000, while in the Ordinary department 12,245 new policies were issued for an aggregate amount of $13,873,000 of life-insurance protection. The results attained in the Indus- trial department were so far out of proportion to what had pre- viously been achieved that it is doubtful whether the record of 1894 will be exceeded during any business year in the near future. This view of the success of 1894 * s brought out in a dis- cussion on the outlook for the year in the Spectator of January ii, 1894, from which I quote as follows : The statements of the various industrial companies will be published in a short time now, and then it will be seen what remarkable progress, in 204 HISTORY OF THE PRUDENTIAL. face of the prevailing depression, has been made. And this brings us to a point on which it is right to dwell a little. The history of industrial insur- ance in Great Britain shows conclusively that in time of stringency, when the outlook of the people who had to depend on their day's earnings to supply the day's needs was unfavorable, the companies made large increases. The reason for this is obvious to the thinker, the agents' field of operation in certain lines was narrowed because they could not get money where money was not, and so they canvassed the class of people who were less affected by the hard times, and there found their opportunity. The lessons of the times had been impressed on the minds of the public ; those who in the season of prosperity turned a deaf ear to the agent's entreaties saw instances every day where the life insurance would have remedied the trouble brought on families by the death of some one who contributed to the funds of the household, and when the agent called again his argument had more telling effect. This is the first time since the inception of the business here that those interested have had to deal with financial panics of magnitude, and it is to be hoped that a very long period will elapse before a like experience is forced upon us. The field men have discovered their opportunities for doing effective work now, and the extraordinary volumes of business turned in of late indicate the possibilities of the present year if labors be rightly directed and continued. Another element of considerable importance in making for the increasing growth and prosperity of the Company was, no doubt, the publication, during the early part of the year, of the report of the Commissioner of Banking and Insurance of the State of New Jersey on the financial and general condition of the Company. Without going into the details of this report, I confine my remarks to a brief reference to the subject as pub- lished in one of the Newark (N. J.) newspapers during 1894: It will be seen that the Commissioner endorses unqualifiedly the methods of The Prudential. This could not be otherwise, for the business has always been conducted in such a way as to merit the approval of all who have known anything about it. Not only so, but the Company's deal- ings with its policy-holders have been more than fair. It has been liberal in the extreme, as was shown both last November, when it made such liberal concessions to its policy-holders who had been compelled to cease paying their premiums, and also in January of the present year, when it introduced several new features, every one of which was of great advantage to the insured. The amount of good which this Company has done can not be indicated in any report and, in fact, it is almost impossible to ascertain what it has accomplished unless one should be able to interview every one to whom a claim has been paid. In this way a mass of testimony to the advantages obtained by Prudential policy-holders would be secured which would fill volumes. THE PRUDENTIAL INS. CO. OF AMERICA, l894~'96. 205 Still another powerful factor influencing public opinion is to be found in the publication this year of a special report of the Deputy Superintendent of Insurance of the State of New York, on his examination of another great Industrial company, the Metropolitan lyife Insurance Company, of New York. Mr. Michael Shannon, as Deputy Superintendent of Insurance, made special reference to three important aspects of the practice of Industrial companies, and from the report I quote, first, his views as to the expense-rate in Industrial insurance : It may not be inappropriate for me to allude, as a plain matter of jus- tice to this business, to the fact that industrial insurance being, as before said, distinctive and essentially unlike in practice that of the other life- insurance companies, ratios and comparisons based upon the records of the latter may be deceptive and misleading. It is obvious, for example, that in the matter of expense no just comparison is possible. In the ordinary companies the premiums are due once, twice, or four times a year, and a large proportion of them, in answer to notices, is sent by the assured direct to the company, or to its local office or agent. Under the industrial plan the premiums are invariably called for, by the agent, at the expense of the company, fifty-two times a year, and even more frequently, When death occurs, the proofs are prepared by the company's representative at the company's cost, and the proceeds of policies are taken in the same way to the beneficiary. In these, as in all its features, the difference is as obvious as between any wholesale and retail business. The multiplication of ma- chinery here means the multiplication of expense, and that expense falls to the company. To these remarks on the vexed and complex question of the management expenses of the business, I add the following re- marks from Mr. Shannon's report in regard to lapses : Criticism is sometimes thoughtlessly or ignorantly made in the matter of lapses. Why do so many withdraw ? Investigation shows that lapses in this form of insurance are of quite a different nature from those in the or- dinary lines. When a policy-holder withdraws from a [Ordinary] company, usually he stays out permanently. He takes his paid-up policy, or his sur- render value, or forfeits his insurance altogether, as the case may be, and that ends the relation. But a vast proportion of those who lapse in the in- dustrial come back. Numberless causes conspire to force them out, such as wide-spread commercial depression, the shutting down of mills and factories, the failure of employers, strikes and other labor disturbances, and enforced idleness from various causes. When they resume work they revive their policies, which they can do within a year, or apply for new ones. Thus they come and go ; thus the process repeats itself. Nor will the fact be overlooked that the opportunity to lapse occurs once, twice, and at the 206 HISTORY OF THE PRUDENTIAL. most four times a year, in the ordinary companies, while the occasion pre- sents itself fifty -two times a year in the industrial. To this straightforward statement of another complex aspect of the business of Industrial insurance, Mr. Shannon added the weight of his official opinion in reference to the expediency of insuring the lives of children, which I quote in full as follows : Still another reference to which I deem it almost unnecessary to allude, and which I do only to give this report the utmost comprehensiveness. I allude to the imputation (occasionally put forth by those who can not have given the records of the business any investigation) that the embracing of small infantile insurances in the industrial plan is subversive of public policy in brief, that it leans toward possible infanticide. This is a mon- strous charge that no person should make without proof. The facts are that the proportion of infantile claims paid during the last year was but 4.3 per cent, of the total amount. This matter has been before the legis- latures of various states, and before numerous humane societies. Com- mittees have been appointed to investigate. Searching and exhaustive in- quiries have been made, and in no single instance has the imputation been sustained. Carefully collated statistics prove that the mortality among the insured minors is less than the mortality of the general infantile population. Out of more than twenty millions of industrial policies issued in this coun- try, but one case coming under this indictment has occurred, and that was the instance of a mother who did away with all her family, including the husband upon whose life she depended for support ! That was manifest insanity. Across the water professional agitators have, from time to time, influ- enced parliamentary investigations, but in every instance the conclusion has been that no legislation or other interference was in any wise necessary or expedient. The State of New York has put its seal upon this matter by specifically providing for the business of infantile insurance in its insurance code. Like action has been taken in the Dominion of Canada. Mr. Shannon's remarks with reference to the expense-rate, the lapse-rate and the insurance of children are fully applicable to The Prudential Insurance Company, as well as to all other com- panies transacting an Industrial business. Where such unanimity of unqualified official opinion prevails, it would seem little short of criminal indifference on the part of those unfamiliar with the practice and results of Industrial insurance to continue in attempts to interfere with the business in one respect or another. The efforts in opposition to Industrial insurance may be divided into three distinct groups : first, those relating to the THE PRUDENTIAL INS. CO. OF AMERICA, l894~'96. 207 discrimination made against negroes, in granting to them only two-thirds of the benefits granted to white policy-holders ; second, those relating to the practice of the companies in accepting small risks on the lives of children for burial purposes and the cost of the last illness ; third, those relating to miscellaneous matters dealing with the practice of the companies as regards lapses, sur- render values, immediate benefits, etc. The opposition to the companies' practice as regards discrimi- nation against negroes originated partly with the sentimental ele- ment of the population, acting on the unwarranted assumption that the companies made this distinction on account of color prejudice, when, as a matter of fact, the distinction was based solely on the observed difference in mortality between the two races, pointing to an inordinate disease prevalence and an exces- sive death-rate among the colored population. As regards the practice of insuring the lives of children, pro- hibitive measures had, almost without exception, been introduced at the instance of individuals connected with societies for the pre- vention of cruelty to children or other so-called humanitarian bodies. There had never, in a single instance, been proof of abuses actually connected with this branch of the business ; no cases had been produced tending to show that children had actu- ally been murdered for the insurance payable at their death, or that they had, in any manner or way, been ill-treated with this end in view. Arguments in favor of prohibiting the business had almost invariably been based on English references to the subject, where, again, cases which were brought forward as facts were, as a rule, fabrications or imaginary instances of neglect. . The companies, on their side of the argument, had presented facts tending to prove that insured children lived longer than uninsured children, and they further could point to their vast experience as proof that, out of the millions of years of child life which had been observed by Industrial companies, not a single instance of foul play or murder for insurance money had ever come to their notice ; and they could add the statement, which holds good to-day as it did then, that never in the history of an Industrial company had a case been proved where a parent had been convicted by a jury for having deliberately murdered a child for the sake of the few dollars receivable at its death for burial purposes. Nevertheless, continued efforts were made in 1894 to prohibit the insurance 208 HISTORY OF THE PRUDENTIAL. of children in the States of Connecticut and Tennessee, as well as in other States, but after a fair presentation of the facts no laws restricting the companies from transacting this form of in- surance were passed during the year, nor have any such laws been passed since that time. In Colorado, where such a law had been passed in 1893, The Prudential had at once discontinued writing insurance on the lives of children under ten, although the decision had been ren- dered by a district court in the city of Denver that the law itself was unconstitutional. If the question is asked why The Pru- dential Insurance Company did not carry this point to a higher court, or possibly to the United States Supreme Court, the answer is that the Company prefers to abide by the will of the people, and if the majority of the Legislature decide that this form of insurance shall not be transacted, the Company is willing to abide by the decision. Evidence is not wanting tending to show that after the law had been passed many of the more intel- ligent members of the Legislature recognized the inexpediency of the measure, and it may not be out of place in this connection to quote a remark from the annual report of the Insurance Super- intendent of Colorado for 1894, in which the view that the trans- action of this form of insurance is not detrimental to public policy is fully accepted by one qualified as Insurance Superintendent to express an opinion on the subject : This kind of insurance is making vast strides and has almost reached the billion-dollar mark in amount of risks written. It is particularly the poor man's field of patronage, and vindicates the superior intelligence and discernment of the working class. The companies handling Industrial in- surance rank high, and a breath of suspicion or distrust has never touched their financial fabric. As to the claim that Industrial insurance encourages child-murder and prompts the murderer's hand to despoil tender youth of life, we insist proof has never been brought forward sufficient to show that crime committed to secure insurance on a child's life has been nearly so frequent as crime committed to secure insurance placed on adult lives in old-line companies. As regards so-called discrimination against negroes, further efforts were made this year to pass laws to prohibit companies from making such discrimination. An effort had been made in New Jersey during 1893, an d a bill to this effect had been passed, which, however, had been vetoed by the Governor. In opposing THE PRUDENTIAL INS. CO. OF AMEKICA, 1 894-^96. 209 a measure to this effect introduced in the Legislature during the early part of 1894, The Prudential Insurance Company presented figures and facts tending to show that the Company would not be warranted in granting the same benefits to colored policy-holders as to whites. The Actuary of the Company furnished data from the Company's own experience, making clear the excessive mor- tality prevailing among colored risks, and it was shown that instead of discriminating against the negroes, the Company had, in fact, been more liberal towards this race than towards the white population. The Company, however, could not feel war- ranted in granting similar benefits to both races without doing an injustice to its white policy-holders, who would be compelled to pay for an unwarranted liberality towards negro applicants. The bill, unfortunately, passed both houses of the Legislature, and was approved by the Governor. The views of the Company on this subject were fully set forth in a letter dated September 5, 1894, to the editor of the Indicator, over the signature of the Vice- President of The Prudential : The Prudential began to issue policies November 10, 1875. From that date to April I, 1881, the applications of colored persons were considered by the Company on the same terms and conditions as the applications of white persons. In the early part of 1881 it was discovered that the number of claims paid by the Company on the lives of colored persons, as com- pared with the total number of claims, exceeded the proportion which the colored business of the Company bore to its whole business. This led to an investigation into the Company's mortality experience amongst the two classes of risks (white and colored), and, although at this early period of the Company's history the number of colored persons on the books of the Company did not compose a body large enough to furnish data for an ex- tended research, positive evidence was found, from the data at hand, that the rate of mortality amongst colored persons insured in The Prudential was considerably above the rate which obtained amongst white persons in- sured in the Company. While the office investigation was being carried on, health reports were obtained from nearly all of the large cities east of the Mississippi. In a number of these reports it was found that the mortality was recorded by white and colored lives. A tabulation of the contents of the reports which gave the mortality by races confirmed the conclusion arrived at from the office experience. As the result of its investigations the Company decided to use a special table of benefits (amounts insured) for colored persons. In the case of adults (ages 12 to 70) this table gave one-third less benefit to a colored person than was granted for the same premiums to a white person of equal age. In the case of infants (ages I to 12) the tables gave to colored infants forty per cent, less benefit than the amounts granted to white infants. 210 HISTORY OF THE PRUDENTIAL. i- Since 1881 the mortality of the Company has been carefully tabulated each year by white and colored risks. Each tabulation has confirmed the first investigation of the Company, and nothing has been discovered in our experience which has led us to modify the tables of rates determined upon at that time. The following table shows the amounts which The Prudential has paid in claims for each $1,000 of insurance exposed to risk of death on white and colored lives for the ten years beginning with 1884 and ending with 1893 : LOSS IN CLAIMS PER $1,000 OF INSURANCE EXPOSED TO RISK. AGES, 1-70. YEAR. WHITE PERSONS. COLORED PERSONS. 1884, $ir 27 $18 T\ 1885 . . nry Atj !886 17 QO ** 4/ 1887 i / yu 1 6 ^o 21 AQ 1888 16 60 21 68 1880 TC A C 21 A1 1800 17 I I 21 4Q 1801, l6 71 21 Ad 1802. 17 QI 21 32 1803, 17 3d. 21 89 Average 10 years, ... $16 06 $21 63 But the high mortality amongst colored persons is not the only objec- tionable feature to the writing of life-insurance policies on their lives. We find, from our office statistics, that policies on colored lives lapse in far greater ratio than policies on white persons, and that the highest percentage of lapse comes within a very few weeks of the issuance of the policy. In fact, the greater portion of the colored business issued by The Prudential is not continued on the books of the Company long enough to recoup the Com- pany for the initial expenses of getting the business. In many cases those who continue their policies do not seem to value them or lay much stress upon their possession. Numerous instances are found upon our books where policies on colored people have been lapsed and revived a dozen or more times. As pertinent to this question, we might state here that within the past two or three years several States have passed laws compelling life-insurance companies to consider applications of colored persons on the same terms and conditions as the applications of white persons. Such legislation has been enacted notwithstanding that all the evidence pointed to the fact that the passage of these so-called anti-discrimination laws would constitute a serious menace to the life-insurauce companies in case there should be a widespread demand among negroes for life-insurance policies. In the States THE PRUDENTIAL INS. CO. OF AMERICA, l894~'96. 211 where such legislation has been enacted The Prudential will receive the application of a colored person under certain rules. Its agents, however, are forbidden to canvass for such applications, and no commissions whatever are paid on premiums collected from colored persons. In those States which allow discrimination between the two races, and in which The Pru- dential may consider applications from colored persons under its rules, we have recently issued instructions that our agents shall write only a small percentage of their whole business amongst colored persons. This letter is not intended as an expression of opinion, personal or otherwise, with regard to the moral or the social conditions of the colored race. It is intended as a statement of the facts and conclusions which cause The Prudential to take the position which it does with respect to the colored race as insurance risks. Neither are any of the objections herein stated, except as to mortality, directed against that class of colored persons who are possessed of intelligence and thrift, and whose social and moral lives are such that they are a credit to the community in which they reside. It may be that if this class could be separated from the colored race as a whole the mortality amongst them might be considerably less than among the entire body ; but we are quite sure that the mortality, even amongst the best of colored lives, would not compare favorably with the mortality amongst the whites. LESUE D. WARD, Vice- President The Prudential Insurance Company of America. In consequence of the New Jersey law, passed in 1894, Prudential Insurance Company to-day makes no effort to obtain colored risks at rates which it feels would be prejudicial to the business as a whole. In this respect, however, the Company differs from some other Industrial companies, which still continue to solicit colored risks in more or less large proportions. With The Prudential this question has never been a matter of opinion, but a matter of thorough study, investigation and observation, and until facts to the contrary are forthcoming, tending to prove that the mortality of the colored race more nearly approximates the mortality prevailing among the white population, the Company is not likely to change its practice in dealing with this class of risks. An effort was also made in 1894, in the State of New Jersey, to pass a law compelling Industrial companies to grant paid-up policies in event of lapse after three years. It has been pointed out that The Prudential had already voluntarily conceded to its policy-holders a five-year paid-up policy, and the Company opposed the measure on the ground that Industrial policies did 212 HISTORY OF THE PRUDENTIAL. not warrant surrender privileges during the first few years of policy duration, in consequence of the large initial expense in transacting this form of insurance. The effort did not prove suc- cessful in 1894, but another attempt was made during 1895, when a bill to this effect became a law. As has previously been pointed out, the Company, during 1894, had made enormous progress in the extension of its busi- ness operations, having gained an exceedingly large proportion of new policy-holders, increasing the total number of Industrial policy-holders by the 3ist of December, 1894, to 2,256,014, for an aggregate amount of insurance protection of $259,840,000. The net increase in policy-holders had been 314,481, equal to 1 6. 2 percent, over the preceding year. Here again it may be proper to refer to a point so easily misunderstood by those who have not made an extensive study of insurance methods. It will be observed, on comparing the net increase in business in force with the vast amount of new business written during the year, that, while over a million and a half of new policies had been written, only a net increase of a little over 300,000 policies had been made. This enormous difference is to be explained on the ground that in Industrial insurance every policy issued is counted for actuarial purposes, irrespective of the fact whether any money has been paid on the same or not. While the agent is required to collect the first premium, very often this is not done and the majority of policies which lapse for non-payment are new policies of less than six weeks' duration. A large number of lapsed policies in Industrial insurance are merely a bookkeeper's statement made for actuarial pur- poses, and do not represent a material pecuniary loss to the public, but rather a considerable loss to the companies. Hence, the very large amount of new business written and lapsed during 1894 may at least be said to point to indirect benefits in the nature of insurance education, in that over a million people were made familiar with Industrial policies and Industrial insurance literature, even though they did not at the time consider it to their interest to keep the policies in force. They lost practically nothing in the few premiums which, in most cases, had been paid, and at least they had had an insurance protection extending over a period of the six weeks or more that the policy had actually been in force, since four weeks' THE PRUDENTIAL INS. CO. OF AMERICA, l894~'96. 213 grace is allowed on every Industrial policy, and every possible opportunity is given for revival or reinstatement. The companies can not be charged with a lack of liberality in dealing with this class of policy-holders, or a lack of good judgment in attempt- ing to extend as rapidly as possible its business operations in all parts of the country where offices have been opened. In few instances has the good work of the Company been more emphatically recognized than in the New York Independent of December 13, 1894, where I find it stated that " The Prudential Insurance Company of America has, to our way of thinking, done one of the most noble works of any corporation in the land. It is excellently well managed, and is rapidly increas- ing its business." The year 1895 found the Company in an excellent financial position, with over $13,000,000 of accumulated assets, with a surplus of almost $3,000,000, and a rapidly extending Ordinary business, now reaching proportions exceeding the business transactions of a large number of companies established for more than thirty or forty years. The year proved, in many respects, one of the most remarkable in life-insurance history. A large number of bills adverse to the interests of the insurance business were intro- duced into the Legislatures of many States. The Industrial business was seriously attacked, partly on account of policy conditions relating to surrender values,* largely on account of the practice of Industrial companies in accepting small risks on the lives of children. As has previously been stated, an effort had been made in the State of New Jersey in 1894 to compel Industrial companies to grant a surrender value after three years of policy duration. The effort had failed, but a new attempt * Although Paid-up policies had been granted by The Prudential and other Industrial companies since January I, 1892, even as late as 1896 a report published by the New York University Settlement Society contained a bitter and unwarranted attack on the business of the Industrial companies, concluding with the statement that "there are no Paid-ups in Industrial insurance." Even the most superficial investigation or inquiry at the offices of the companies would have made it clear that every policy issued since 1892, and by retroaction all policies issued previous to that year, contained a clause granting a surrender value in the nature of Paid-up insurance. 214 HISTORY OF THE PRUDENTIAL. made during the early part of 1895 proved successful, and a bill to this effect became a law. Referring to this species of legislation, the Insurance Monitor, under date of April ist, well said that The object of this law was to compel the payment of surrender values by industrial companies at the end of three years. It originated in 1893 as so many insurance measures have originated with a member who had once been employed as an industrial agent, and who had had a personal grievance with his company. This man did not claim to have any such knowledge of the business as would enable him to decide what surrender values could safely be paid. But the surrender value of New York, which expressly relieved industrial companies from its operations, was copied in nearly all its essential features, and made applicable to this class. The legislative committees were shown, not merely by figures furnished by the company, but by figures in the archives of the State, that there was absolutely no such fund in the possession of the companies as was assumed in the bill from which the surrenders could be paid. They were shown that any payments made must be taken from funds which, if they belonged to the policy-holders at all, were the property of those who had been longer insured. They were shown that all the objects aimed at in the bill had already been accomplished by competition, and that it was an attack on the interests of those longer insured. They were shown that the bill was directed against the institutions of their own State in the interest of outsiders. These committees and legislators were appealed to by some of the most influential men of New Jersey not to do this unjust thing. It was openly confessed by members of their own body that not a single sufficient reason had been shown for its passage. In compliance with the law, The Prudential, under date of June 24th, issued the following circular letter for the information of its agency force and the general public : PAID-UP POLICIES. All policies issued after July ist will be subject to Paid-up Policies after three years' premiums have been paid, provided written demand is made for the Paid-up Policy within three months from the date of lapse. In the case of Life Policies, Paid-ups will be issued either for the Whole of Life or for the Expectation of Life, as the person insured may elect. Tables of Paid-ups per $100 of original insurance under the latter plan will be printed in the policy, as per present practice. In the case of Endowments, Paid-up Policies will be for proportioned parts, as at present ; but the period after which a Paid-up may be obtained will be reduced from five to three years. This concession will apply only to policies issued on and after July i, 1895. In the same circular letter it was stated that all policies issued after July ist would be incontestable after two years, and a further THE PRUDENTIAL INS. CO. OF AMERICA, l894~'96. 215 concession was made with respect to immediate benefits under infantile policies, which I quote as follows : IMMEDIATE BENEFITS. It has been decided, with respect to the "Immediate Benefit" conces- sion, to modify the Infantile contract to this extent : That the sum payable in case of death within three months from date of policy will be shown by the following table. After three months the present benefits will be payable. The benefits in the Colored Infantile Policy will be reduced in proportion. The benefits in the Adult Policy will remain the same : TABLE OF BENEFITS FIRST THREE MONTHS OF INSURANCE. FOR A WEEKLY PREMIUM OF FIVE CENTS. AGES. 2 3 4 5 6 7 8 9 10 II 12 Infantile White, $8 $10 $11 $13 $15 5i7 $20 $22 $25 $30 $35 Mention has been made of an earlier concession to the policy- holders of The Prudential on policies designated as ' ' Special Adult ' ' business. Dividend additions had been provided for poli- cies of this class issued during the years 1890-' 93, of which the first fell due during the early part of 1895. Accordingly, under date of January 2nd, the Company issued the following circular letter relative to this class of policies : DIVIDEND ADDITIONS ON SPECIAL ADULT POLICIES. At the end of each fifth year from the date of this policy, if in force, the sum hereby insured will be increased by an amount to be determined by the Company, and based on the surplus earnings from similar Special In- dustrial policies. Each Addition so made shall be considered as part of this policy, and subject to the same conditions and agreements. In compliance with this agreement, we have this day decided to add Three (3) per cent, to the original amount insured under all Special Indus- trial policies issued in the year 1890 which contain the above condition, the increase to apply on the fifth anniversary date of the policy, and not before. For example, a policy of $1,000 will be increased to $1,030, and a policy of $500 to $5 15. Although the evidence furnished by the documents from which I have quoted illustrates The Prudential's spirit of lib- erality in dealing with its policy-holders and its sense of caution in the management of the business, with special reference to 2l6 HISTORY OF THE PRUDENTIAL. possible undesirable conditions, it is difficult to understand the large number of attempts at adverse legislation made during a year when the business of Industrial insurance had reached a sufficient degree of magnitude to be fully understood by legisla- tors, as well as by professional agitators and others opposed to the business of Industrial insurance. It is something very con- siderably to the credit of the intelligence and honesty of the average legislator that, although numerous attempts were made to interfere with the Company's practice in accepting risks on the lives of children, no laws of this nature were actually enacted. Such attempts were made in Missouri, Idaho, Illinois, Michigan, Georgia, Tennessee and Massachusetts. Of these numerous attempts it is only the last two which require special mention. In Tennessee an effort was made during 1895 to prohibit the insurance of children ander twelve years of age. The Insurance Committee of the Legislature gave a number of hearings on the subject, and convincing facts were presented by the companies, on the basis of which it was not considered expedient to legislate adversely to the business. Without going extensively into an interesting phase of insurance legislation, I may add that, in response to a circular of inquiry addressed to a large number of well-known practicing physicians, charitable agents and health officers in the cities of Tennessee and Kentucky, asking for an expression of opinion on the subject of insurance of minors, numerous replies were received, all more or less strongly in favor of the system. The letters were presented to the Tennessee Legislature, and I quote a few of the characteristic statements to show what experienced and intelligent men thought of the business at the time. Dr. Edwin Hawes, agent of the Louisville Charity Organization Society, expressed the emphatic opinion, based on personal experience, that ' ' The result of my investi- gation was that I became thoroughly satisfied that Industrial insurance was a great blessing to the people. It has enabled great numbers, under my own observation, to bury their dead without having to call on the public for help as dependents on the city authorities. I have never heard of a single case where there was the least cause of suspicion of foul play in the sickness or death of an insured child. ' ' Dr. Thomas L. McDermott, Presi- dent of the Louisville Academy of Medicine, stated that "In my experience, which is large, I have nothing to say but to commend THE PRUDENTIAL INS. CO. OF AMERICA, l894~'96. 217 the insurance of children, especially among the lower classes, as it really furnishes the means of securing medicines, burial, etc. I have not, in a single case, seen anything wrong in the management of these cases. ' ' Dr. R. L. Vaught, Professor of Anatomy, Chatta- nooga Medical College, stated that " I have been engaged in the active practice of medicine in the city of Chattanooga for eight years, and among the people I have served professionally have been many who carried what is known as Industrial insurance upon the lives of their children, and I have never yet known of a case of abuse or neglect of such children by reason of a desire upon the part of the parents to secure the insurance money. ' ' Among others approving of the system were Dr. W. P. White, Health Officer of Louisville ; Dr. F. S. Reynolds, County Health Officer of Memphis, and Mr. Thomas H. Taylor, Chief of Police of the city of Louisville. Mr. Taylor said that ''During the whole of my incumbency in office I have never known or heard of a case where parents or others were either charged or suspected of abuse or mal- treatment of their children for the purpose of getting the proceeds of insurance on their lives. If such had been the case in this city, I feel sure it would have been brought promptly to my attention. ' ' Influenced, no doubt, by the large body of evidence furnished by the Industrial insurance companies, the Legislature of Tennes- see, after careful investigation, refused to interfere in any manner with the business of Industrial insurance. The attempt made in Massachusetts this year to prohibit the insurance of children under ten years of age was, however, un- questionably the most determined effort ever made to interfere with an essential and integral part of the business of Industrial insur- ance companies. An organized and unusually determined effort was made by certain members of the Society for the Prevention of Cruelty to Children, and lengthy hearings were granted by the Legislature to both sides of the controversy.* Among others, * The opposition to the insurance of children, on the part of this society, was in marked contrast to an earlier view expressed in the annual report for 1891, where it was stated that " We find in English reports that parents are charged with insuring the lives of their children in order, by neglect, if by no worse crime, to destroy the child to secure the insurance. We have taken pains to inquire into this practice here, but have found no evidence of such intent, although many insure their children's lives and use the proceeds, in case of death, to provide for funeral expenses." (p. n.) 218 HISTORY OF THE PRUDENTIAL. Mr. Dryden appeared before the Insurance Committee and pre- sented a comprehensive statement of carefully collected data and statistics tending to show that, as far as the Company had been able to learn, there was no evidence that the business was detri- mental to public policy, but that, to the contrary, there was an abundance of proof tending to show that Industrial insurance was, in all respects, an agency making for the promotion of thrift and the general welfare of the industrial population.* Mr. Dryden first called attention to the fact that the actual mortality experience of The Prudential, during the eleven years 1 88 3-' 93, of children aged one to nine had been more favorable than the expected mortality by the life table on which the Com- pany's rates were based : COMPARISON OF THE PRUDENTIAL MORTALITY EXPERIENCE WITH FARR'S ENGLISH LIFE TABLE. AGES i TO 9. AGE. PRUDENTIAL EXPERIENCE, ELEVEN YEARS. ENGLISH I/IFE TABLE (1883-1893.) No. 3. I 61.55 65-59 2 30-35 36.14 3 20.35 24-33 4 I5-23 17.92 11.85 13-53 6 9.04 10.75 I 6.92 6.10 9.16 7-69 9 5-40 6.57 It will be observed that, at every age under consideration, the mortality experience of The Prudential was lower than that shown, by Farr's Table No. 3, to obtain among the general popu- lation. Mr. Dryden pointed out that it could not be argued that insured children represented selected lives, since the Company did not make use of medical examinations for children under the * Those interested in the history and practice of Industrial insurance companies should address the Secretary of the Company for a copy of Mr. Dryden's " Statement," which forms one of the really important and perma- nently useful contributions to Industrial insurance history. THE PRUDENTIAL INS. CO. OF AMERICA, l894~'96. 219 age of ten years. Rather to the contrary, a higher mortality of insured children should be expected, since the children of the general working population were subject to a much higher death- rate than the well-to-do or the rich. The argument was further supported by abundant statistical data for Massachusetts and other New Kngland States, showing that there had been a very material decrease in the mortality of children since the introduc- tion of Industrial insurance. To clear away a very serious misunderstanding met with among those who had not studied carefully the question of Indus- trial insurance, Mr. Dryden pointed out that the average amount paid on claims on policies under the age of nine had only been $24. 74. I copy, in part, the table presented by Mr. Dryden to show the average amount paid on claims at various ages during the period 1890-' 94 : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. CLAIMS PAID DURING FIVE YEARS (1890 to 1894) ON INFANTILE POLICIES, AGES i TO 9. AGE AT DEATH. NUMBER OF CLAIMS. AMOUNT OF CLAIMS. AVERAGE CLAIM. I- 2 3>934 $76,645 oo $19 48 2- 3 5.772 114,725 oo 19 88 3- 4 4,091 91,768 oo 22 43 4- 5 3.078 78,064 oo 25 36 5-6 6- 7 2,417 2,OII 73,895 oo 72,422 oo 30 57 36 01 7-8 1,607 68,529 oo 42 64 8-9 1,203 61,050 oo 50 75 9-10 984 58,984 oo 59 94 In commenting upon the table Mr. Dryden well said that "At the tender ages, when there would be danger, if danger existed, which we deny, the amount is so small as to be insufficient for burial expenses, to say nothing of medical attendance, medicine, and other necessary disbursements in such cases. ' ' * * The cost of funerals varies with different localities. Customs and circumstances have much to do with the actual outlay, and it is very difficult to discuss the question of funeral expenses of children, on the 220 HISTORY OF THE PRUDENTIAL. Additional proof that the insurance of children was not det- rimental to child life was furnished by a table supplied by Mr. Dry den, which shows the comparative mortality of adults and children as to the expected and the actual loss for each group of risks : MORTALITY EXPERIENCE OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. COMPARISON OF INFANTILE AND UNEXAMINED ADUI/T POLICIES. POLICIES IN FORCE LESS THAN ONE YEAR. Expected and Actual L,oss on each $1,000,000 Exposed to Risk of Death. CLASS OF RISKS. EXPECTED L,oss, FARR TABLB No. 3. ACTUAL Loss. RATIO ACT. TO EXP. Adult .... $12 741 OO 4j7 /147 OO TQC r Infantile . . jc 6l7 OO 1 3 046 oo 8* a O'O From this table it is quite clear that, while the actual mor- tality of adults exceeded the expected mortality in the ratio of 105.5 to every $100, the ratio of infantile claims was only 83.5 to every $100 of expected loss. Hence, as far as the Com- pany's experience was able to disclose possible detrimental conditions, it had clearly been proven, on the basis of actuarial testimony of unquestioned value, that the practice of the com- panies was not adverse to the interests of insured children or the general population. Mr. Dry den concluded his argument with a basis of statistics, but it may be of interest to the reader to learn that in the city of Newark, N. J., the cost of burial, including the grave and what is usually looked upon as the common decencies, is $25 at age one, $35 at age five and $50 at age ten. These amounts correspond very closely with the average sums paid at the death of insured children in the expe- rience of The Prudential. In the city of New York the lowest cost of funerals for children under the age of four is stated to be from $12 to $18, but the actual average cost is no doubt higher, at least where a little more than the barest necessity is provided. If to these items is added the cost of the last illness and the extra expenses incident to a death in a family, it will be apparent that the amounts paid by Industrial compa- nies, at the death of children, are not more than sufficient to meet the actual cost of burial and last illness. THE PRUDENTIAL INS. CO. OF AMERICA, l894-'96. 221 number of quotations from an exceptionally able work on ' ' The English Poor," by Mr. Thomas Mackay, to-day recognized as one of the highest authorities on Hnglish Poor Law administration and the social and economic conditions of the people.* Mr. Mac- kay considered the subject of Industrial insurance in an entire chapter of the work referred to, but I must needs limit myself to a few brief extracts which will indicate the results of his ex- tensive personal investigations : It is not too much to say that the country owes a great debt of gratitude to these institutions. They have kept alive, during a very dark period of working-class history, some small interest in the principle of insurance, some respect for this valuable expedient of survival amid the dangers of civilized life. The philanthropists complain that these insurances rarely provide any- thing more than a funeral benefit. But, we ask, have not these very philan- thropists been parties to the conspiracy which has taught men that the State will give a pension to their wives and children when they die ? By a miracle the poor man's abhorrence of a pauper funeral has survived the machinations of the philanthropist. On this not too hardy instinct of inde- pendence the commercial companies have had to work.f With a fatuity which is almost incredible, well-meaning philanthropists have endeavored to disparage the work of these societies, because forsooth they adapt themselves to the necessity of the case and collect the premiums weekly by house-to-house visitation. As has previously been stated, the subject was considered in all its bearings, the facts were fully set forth, the members of the Legislature were fully informed as to the merits of the contro- versy, and the proposed law prohibiting the insurance of children under ten failed of passage by the overwhelming vote of 149 members in favor of Industrial insurance against 23 members opposed to it. The conclusion is therefore warranted that this vote, following as it did upon the most extensive investigation ever made into Industrial insurance in this country, is a positive endorsement of the entire scheme of Industrial family insurance * Published by John Murray, London, 1889. t"We need measures which shall increase individual responsibility rather than diminish it ; measures which shall give us more self-reliance and less reliance on society as a whole. We cannot afford to countenance a system of morals or law which justifies the individual in looking to the community rather than to himself for support in age or infirmity. ' ' (Arthur T. Hadley, "Economics," p. 63.) 222, HISTORY OF THE PRUDENTIAL. as it is carried on at the present day.* That Mr. Dry den' s remarks carried weight with those who were anxious to consider with justice and fairness both sides of the controversy is perhaps best illustrated by the following extract from the Insurance Herald under date of May 30, 1895 : Of the literature which the contests evoked the statement of President John F. Dryden, of The Prudential, made before the Committee of the Massa- chusetts Legislature is the most valuable contribution to the general knowl- edge of industrial insurance and its progress that has yet been made. It is a complete answer to the sentimental charges that have been trumped up against the practice of insuring each child in the general scheme of family insurance. President Dryden's statement has been issued in pamphlet form, and a copy of it should be placed in the hands of every official connected with public and private charity organizations. These bodies could perform no greater work for the general good than to spread the practical gospel of industrial insurance among the poor as the stepping-stone to self-reliance and proper pride. By a careful study of the pamphlet they would them- selves perceive the great benefit that industrial insurance is conferring upon the American people. Mr. Dryden deserves the thanks of all his colleagues * The large majority vote cast in favor of the system of family in- surance, and against a measure tending to prohibit an integral part of the business, is of special significance in this case. It has well been said of such public approval, when expressed by the vote of a decisive majority, that "To responsible politicians the course to be pursued will depend mainly on fluctuating conditions of public opinion. Restrictions will be imposed, but only when and as far as they are supported by a genuine public opinion. It must not be a mere majority, but a large majority; a steady majority ; a genuine majority representing a real and earnest desire, and especially in the classes who are most directly affected ; not a mere factitious majority such as is often created by skillful organization and agitation ; by the enthusiasm of the few confronting the indifference of the many. In free and democratic States one of the most necessary but also one of the most difficult arts of statesmanship is that of testing public opinion, discriminating between what is real, growing and permanent, and what is transient, artificial and declining. As a French writer has said, ' The great art in politics consists not in hearing those who speak, but in hearing those who are silent.' " (William Edward Hartpole Lecky, "The Map of Life," p. 140. Longmans, Green & Co., New York, 1809.) To these words of Mr. Lecky the writer would add that the masses, who as a rule have been silent when the most unwarranted charges have been made against their intelligence and morality, will not fail to assert themselves in a manner wholly unexpected by those whose slight knowledge of the people forbids a more intelligent appreciation of the efforts and struggles of the working people. THE PRUDENTIAL INS. CO. OF AMERICA, l894~'96. 223 for his clear, direct and forcible demonstration of the public value of the scheme of family insurance which he represents in his great company. A further endorsement of the practice of Industrial com- panies is to be found in the annual report of the Insurance Commissioner of Connecticut for the year 1895, where it is pointed out that Charges of gross neglect and even murder of children, for the sake of the insurance upon their lives, are of too serious a character to be over- looked. These charges, however, are as easy to make as they are difficult to prove, but until they are supported by proof they should have no influence upon our judgment. I do not know of any facts which prove such a con- clusion, and I have been unable to find any case where a child has been murdered for the sake of the insurance upon its life. On the other hand, the testimony is that such insurance makes the parents thrifty and provident, and statistics show that the rate of mortality among insured children is less than the rate among children generally. Other valuable contributions with special reference to the insurance of children were made this year by Dr. Hugh R. Jones, in his prize essay on the ' ' Perils and Protection of Infant Life, ' ' published in the ' 'Journal of the Royal Statistical Society, ' ' Vol. lyVII. Dr. Jones concluded his observations with the remark that " I have briefly reviewed the more important evi- dence existing on the subject. I have weighed, as carefully as I am able, all the information I have gathered. I have discussed the subject with medical men resident in districts where insur- ance prevails extensively, and my own conclusion is that the evils of child insurance have been unnecessarily exaggerated. # * * # >p ne incentive to child-neglect and child-murder is not the prospective receipt of insurance money. * * * * Cases of neglect are more frequent, into which the element of insurance does not enter, than those upon which it is supposed to exercise influence." Other valuable papers on child life insur- ance were read by Mr. J. Moon and Mr. W. H. Aldcroft, before the Insurance Institute of Manchester, Kngland, which also form valuable contributions to our knowledge of the subject.* * Few men have had better opportunities to study scientifically the various aspects of the question of life insurance for minors than Mr. David Parks Fackler, for many years the Actuary of the New Jersey Insurance Department, Consulting Actuary to many life-insurance companies and one 224 HISTORY OF THE PRUDENTIAL. The concensus of opinion of those who investigated the subject most carefully, and who relied upon the only basis of fact which should be taken into account in any legislation upon the subject, that is, the statistical evidence supplied either by the companies or the government, was therefore in favor of the practice of the companies, and it may be asserted with confidence that legislators and others will continue to take into considera- tion the evidence and the body of facts on which the Industrial companies rest their side of the argument. The business progress of the year 1895 was > no doubt, partly interfered with by the large number of attempts at ad- verse legislation to which reference has been made. There was also a natural reaction after the previous year's operations, and the increase made in policy-holders during the year 1895 was materially below the average. However, while many other com- panies experienced a decrease in the total amounts of insurance in force, The Prudential succeeded not only in holding its own, but in adding almost 75,000 Industrial policy-holders to its already large number of patrons. Noting briefly the condition of the ! Company under date of December 31, 1895, tne annual report states that the total number of policy-holders had now reached ' 2,330,741, for an aggregate amount of $268,414,100 of Industrial insurance protection. In the Ordinary department the number of policy-holders had increased to 30,893 for $34,716,055 of insur- ance protection. The finances of the Company were in an time President of the Actuarial Society of America. Under date of March 19, 1895, Mr. Fackler addressed a long letter on the subject to the editor of the Weekly Underwriter, from which I make a brief extract: its Home Office in the City of Newark, New Jersey, this signed this Policy Vice President. INDUSTRIAL POLICY FORM AT PRESENT IN USE BY THE) PRUDENTIAL, INSURANCE COMPANY OF AMERICA. Conditions and Agreements. and ill 6th. PAYMENT or PREMIUM*. All premiums are payable at the Home Office of tbe -The Company may make any payment provided for In Company, but may be paid to an authorized representative of the Company ; but payments ' 'fffSSsS^SIS^SS^SSSi ^SfSSf&m SSSSfSX "SfflSZSKtESZ ttiSSSKlS! , , . , , burial or for n-hen due. by an authorized representative of the i .,3duiyofthe ^sSSSSSSL'a&s&'&s ?^^^^s^^^^^^:^^h^^,^ or ^^ other person appearing t baring Incurred expense in any way c >ny other purpose, and tbe production by ofiaidpersonsorofotbersumclentproof. . . conclusive evidence that such Benefits have be. -n paM ' ihereto. and that all claims under this Policy have been fully satisfied . Tbe Insured may r a period not exceeding four weeks, the Company will pay , subject to the conditions of tbe Policy. the State of New Jersey 8S2T any other company! I premiums on such insurances shall exceed ten cents | CASH SURRENDER VALUES of Twenty Years and of each Fifth Year thereafter If Policy Is ontlnued In force The amounu In the following table are bused on a weekly premium of 6 cents. If tbe weekly premium on Ih proportionately Increased. For example, if this Policy Is subject to a premium of 10 cents per week, the Cash Surren U l!i cents per week, tbe Cash Surrender Value wllMie three times the amount in this table, and so on. Surrender Valu i li End of End of E r Endo, li End of End of IJ End of End Of s- l Years !i:S 17.00 a N ii i? M N stiso s? : 11 5 37 i^ 11 1!:S M I j !?:So H 27 30 w.w i! u! n'.a 1 4') '-) li .00 j 50 23 a n :n M i s? 1 15.50 S.S 16.50 !?-S la'oo II 19.50 .50 S3 41.00 n IS. SI - Jj 40.00 1* 22 5:5 n a Hi ?-s K-S! i! 1 IS 50 '50 S 42 00 1 1 sssss n iC li> i 11 20'. S:S 5| 26 25 2! C i* s? 1.00 0:00 12.50 12.00 El ::::::: 18 1 50 20:00 33 lolso 23.00 H H 34.00 34 00 xiso .1 " is'oo 5 s-s 00 ?'no JO M THE PRUDENTIAL INS. CO. OF AMERICA, l897~'98. 237 by the policy. The circular enclosed herewith gives the amount of these Additional Benefits for the year 1897 in the case of policies on which five years' premiums have already been paid. You will observe that the Addi- tional Benefit on policies issued in 1892 is $1.40 for each $100 of insurance, and that the sum increases steadily with each additional year the policy is in force until, on policies which have been twenty-one years in force, the Additional Benefit reaches the sum of $5 per $100 of insurance. These amounts appear liberal when applied to individual policies, but the full effect and great expense involved in this concession can only be judged when we say that the Additional Benefits for 1897 are applied to a total of over $130,000,000 of insurance. You will observe that the Additional Benefits cease at the time the first Cash Dividend is paid, as the distribution of profits which will be made at that time may prevent the Company from declaring Additional Benefits thereafter. Under the second heading, "AFTER FIFTEEN YEARS CASH DIVIDENDS," we find an agreement to pay to the insured a Cash Dividend on the policy after fifteen years' premiums have been paid and at the end of each fifth year thereafter. In other words, each policy hereafter issued will participate in profits on the Accumulative Dividend Plan, the first dividend being declared at the end of fifteen years, and the subsequent dividends at the end of each fifth year during the further continuance of the policy. We next find a paragraph headed 'AFTER TWENTY YEARS CASH SURRENDER VALUES.'* Here we find an agreement to pay, at the end of the twentieth and each fifth year thereafter, a definite cash value upon surrender of the policy. If you will examine the figures shown by the table on the back of the policy you will find that the values promised are much the same as those given under an Ordinary contract, thus proving the liberal tendency of The Prudential in adopting this feature in its new policy. We next find a paragraph headed "PAID-UP POLICIES AFTER THREE YEARS." This condition provides for a Paid-up Policy according to the present tables, but we have omitted the tables from the back of the policy so that the new contract may not be obscured by too much type. The amounts of the Paid- ups, the period of the Expectation of Life, will be precisely as contained in present tables. You will notice, however, one important change, and that is that Paid-ups will be given under the new contract after the insured attains the age of 13 instead of age 15 as heretofore. RETROACTION. The foregoing concessions are so far-reaching and so entirely new in Industrial insurance that it becomes a serious problem as to whether they can be applied to existing policies ; and me problem is complicated when the 238 HISTORY OF THE PRUDENTIAL. immense amount of insurance in force at the present time over three hun- dred millions of dollars is considered. A concession on this vast sum of insurance of even $i per $100 of insurance would be a master of three millions of dollars. Under the new concessions we are brought face to face with much larger amounts. The application of the benefits given in the new policies to existing contracts must therefore, of necessity, become a matter of experiment and of experience, as the Company's entire business has been in the past. But, we will say that if experience proves that it is safe, the new concessions will be made applicable to old contracts as fast as the conditions will justify us. During the year 1897 Cash Dividends will be paid on policies issued in 1877 and 1882, and Additional Benefits will be paid on all policies on which five years' premiums have been paid. The amount of the payment in indi- vidual cases under these two benefits will be found in the circular herewith. The table of cash dividends on policies issued in 1877 is made up of the amount declared for that year, plus the dividend of 1882. This is in keeping with the principle of the new policy, of paying the first dividend at the end of fifteen years, with an additional dividend at the end of each fifth year thereafter. You will observe that Additional Benefits, but for a reduced amount, will be paid on policies issued in 1877 and in 1882, even after the Cash Dividend has been paid. We hope to receive certain benefits in return for the important conces- sions which are herein announced. First of all we expect that the new policy will ENCOURAGE AGENTS TO REMAIN in the employ of the Company. The Agents can now offer inducements never before heard of in Industrial insurance. They can uphold these in- ducements by practical results. It will thus be easier to secure new appli- cations and to induce policy-holders to keep up their policies. Besides all the advantages coming from connection with the Industrial Branch, you will have the clear-cut, liberal policies of the Ordinary Branch to sell, backed up by the growth and actual results of that Branch in the past eleven years. No corps of Agents in this broad country in fact, in the world will have better or more liberal contracts to sell than the Agents of The Prudential Insurance Company. They will be in a position to insure the poor or the rich, giving each the best insurance that can possibly be ob- tained. Under such conditions as these, and with such opportunities, we believe our Agents will be very slow to leave our employ. We hope also to secure A LOWER LAPSE RATE. Our new policy is so designed that it becomes more valuable to the insured with each successive payment. We have dealt with our policy-holders with a degree of liberality which has never before been known in life insurance. * * * * It remains with our policy-holders to show their appreciation by keeping up their policies INCORPORATED AS A STOCK COMPANY BY THE STATE OF NEW JERSEY* PAID-UP LIFE POLICY. In Consideration of the Application for this Policy, and of the surrender of the former Policy, No , on the life of - , herein designated as THE INSURED, The Prudential Insurance Company of America hereby promises to pay, at its Home Office in the City of Newark, New Jersey, unto the executors, a,, administrators or assigns of the Insured, unless settlement shall be made under the provisions ooii>, of article second hereinafter contained, the sum of - - Dollars. within twenty-four hours after acceptance at its said office of satisfactory proof of the death, of the Insured. This Policy is issued and accepted subject to the following conditions and agreements: FIRST In case the age shall have been misstated in the original Policy for which this Policy is issued in exchange, the amount insured _ by this Policy shall be corrected to the amount that would have been granted if th~ age of the Insured had been accurately stated. 8COND. The Company may pay the sum of money insured hereby, to any relative by blood or connection by marriage of the Insured, or to any other person appearing to said Company to be equitably entitled to the same by reason of having incurred expense in any way on behalf of the Insured for his or her burial, or for any other purpose, and the production by the Company of a receipt signed by any or either of said persons, or of other sufficient proof of such payment to any or either of them shall be conclusive evidence that such sum has been paid to the person or persons entitled thereto, and that all claims under this Policy have been fully satisfied. THIRD. The Insured may serve in the Militia or in the Army or Navy of the United States, in time of peace or for the purpose of pre- serving order in case of riot ; but in time of war, a written permit for such service must be obtained from the Company and an extra premium paid. In case of the death of the Insured from service in war without such permit, the liability of the Company shall be limited to the net reserve on this Policy computed according to the legal standard of the State of New Jersey. FOURTH. No suit on this Policy shall be Co tainable against the Company unless brought within six months after the date of death of FlFTH.-If full proof of death is given to the Company within thre* months next after the death of the insured, and if tt)e foregoing con- dition as to occupation shall have been complied with, this Poficy shall be incontestable, except that the sum insured may.be adjusted for mi% statement of age. In Witness Whereof, the President and Vice President of said Company nave signed these presents at its Home Office in the City of Newark, New Jersey, this day of 189 c/ INDUSTRiAU-Puo-ur Un. ton, of 7- PAID-UP POLICY FORM AT PRESENT IN USE BY THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. THE PRUDENTIAL INS. CO. OF AMERICA, l897-'98. 239 and continuing their confidence in the Company. If these expectations are realized, we shall consider that we have received our reward for the conces- sions herein set forth. It is hardly possible to exaggerate the far-reaching value of these additional voluntary concessions made by The Prudential Insurance Company, and it was well stated in The Prudential Weekly Record of January 4, 1897, that " From its inception The Prudential has never neglected the lesson taught by its own experi- ence. And so to-day the Company issues this new contract and makes these additional concessions to its old policy-holders because the experience gained in the past twenty-one years shows that such improvements are practical and safe." And it could be said with perfect truth that, ' ' for simplicity and liberality to the insured, the new Industrial policy has never been approached by any Industrial insurance company in this country or abroad." With equal justice the Company could speak of this step in advance as ' ( co-operation ' ' in the true sense of the word, and of Industrial policies as ' * profit-sharing contracts, ' ' practically identical with policies issued by Ordinary life companies, placing the man paying a five-cent premium on the same level, as regards benefits and liberal surrender provisions, as one paying a premium of $5,000 annually. For five cents a week a Prudential Industrial policy provides at present not only for the contingencies of the future, but also offers a legitimate reward for the present, because by its terms an equitable distribution of the profits accruing from this small investment is made in the numerous ways referred to in Mr. Dryden's letter. The financial aspect of so far-reaching a step in advance may fairly be appreciated when it is stated that the cost of the voluntary concessions made by The Prudential Insurance Company to its Industrial policy-holders to January i , 1897, was approximately $700,000, representing, however, but a small fraction of future obligations incurred voluntarily by the Company. Among numerous improvements made in the agency admin- istration of the business, one of considerable importance deserves to be mentioned. Under date of January 2, 1897, the Vice- President of the Company informed the field force that " For some time past we have experimented with medical inspections, and, finding the plan successful, it has been determined to extend 240 HISTORY OF THE PRUDENTIAL. the system. ' ' The method of medical inspection was briefly out- lined in a circular letter of the Medical Director to the Company's Medical Examiners, from which I make the following extracts : A medical inspection is satisfactory when the following conditions are fulfilled : 1. You should personally see the applicant. 2. You should give as near as you can his [or her] correct age next birthday, regardless of any statement made on the application. 3. You should state to the best of your judgment his [or her] present condition of health. 4. You should ascertain if he or she has signed the application and paid the premium. Remember that, whenever you are requested to make an examination, an inspection will not answer. There is a decided difference between an inspection and an examination. In an inspection, judgment is given from the appearance of the individual as well as from answers to inquiries that may be made. In an examination the party is not only asked certain ques- tions, but the Examiner is expected to ascertain by percussion and auscul- tation the condition of the heart, lungs and abdominal viscera. Under this practice all adult applicants are now either med- ically inspected or examined, and the former opportunities for adverse selection have, therefore, been correspondingly dimin- ished. Among other changes and improvements in the practice of the Company, a new form of application was issued this year, which is reproduced on the opposite page. The only material alteration in the application was in reference to the signature of the parent or guardian of the person to be insured, if applicant was under the age of fifteen next birthday. The application reproduced is the one at present in use by the Company. A new ' ' Manual of Instructions ' ' was issued to the field force, the essentials of which are summarized in the following brief rules for agents, illustrating the systematic and thorough manner in which the field operations of the Company are con- ducted : 1. Collect promptly and systematically during the first part of each week. Collect at least one week's premium at the time of writing an appli- cation. 2. Write up your account and transmit your cash on time. 3. Report for lapsing all policies four weeks in arrears. 4. Canvass persistently and methodically. Form 1 . AGENT....... ... POLICY NO, Ass't Sup't _ District FOB OFKICK USB. APPLICATION FOR INSURANCE IN FOB OFFICE USB. Approved by I The Prudential Insurance Company of Arnerica. HOME OFFICE, NEWARK', N. J ut Questions to be answered by the person whose life is proposed for insurance if age is 15 years NEXT birthday or over, but, if younger, by the Parent or Guardian. FULL NAME OF PERSON TO BK INSURED! MED. EX. CALL At o'clock, A. M., P.M.. on Right or Left. 3. DATB OF BIRTH ! Month. Day. 4. AOK NEXT BIKTHDAYI 5. AMOUNT OF INSURANCE) 6. MEEKLY PREMIUM 1 ? 7. PLACE OF BIRTH t 8. RACE I 9. SEX I (State or Country.) (White or Colored.) |O. MARRIED OR SINGLE I 1 1. OCCUPATION! (If Adult.) (Omit for lives less than 13 years.) I 12. Is life proposed now in- sured in this Company P I f so, state nu m bers and amounts of Policies. Is life proposed no\v insured in any other Com pany ' I f so, for what amount! P 13. Has life proposed ever been < rejected or postponed by 2 this or any other Company ! If so, by what Company ! ^ 14. A. What is the present con- O When last sick ! Of what Disease f D. Does any physical or dition of health ! Month. 1 Year. defect or infirmity exist ! 15. Height and Weight ! 16. Has either Parent or any Brother or Sister died of Consumption t 17 Does Rupture exist ! 18. Is spirituous used! liquor If so, is a proper truss worn ! Is opium or any narcotic used 1 19. Has life, proposed ever suffered from Consumption, Asthma, Spitting of Blood, Habitual CoURh, Apoplexy, Paralysis, Heart Disease, Insanity, Fits or Convulsions, Rheumatism, Disease of the Liver or Kidneys, Cancer, Ulcers or Accident of any kind! State what disease. I HEREBY APPLY for insurance for the amount herein named, and I declare and warrant that th 'tten opposite the respective questions by me. or strictly in accordance with my directions. I contract of insurance between me and The Prudential Insurance Company of A ' of this application, shall^ be accepted subiect to the conditions and agreements : Signature of Applicant, ' old NEXT birtkda 1sed Policy Register for that week ; and it is agreed th^t the Company is not bound to prove that I have 4. That in case of my resigning the Agency, or of my being dismissed therefrom, I agree to introduce to my successor in the Agency all the policy-holders in my Agency after such resignation or dismissal, upon being requested so to do by the Company. 5. That " Official Transfer," as used herein, means the transfer on the Company's books at the Home Office of policies to or from my Agency during and after my term of service with the Company. 6. That in case any policy or -policies in my Agency become lapsible under the Company's rules, through default in payment of premiums, and I fail to report such policy or policies to the Company for lapse at the time specified in said rules, the arrears in excess of the amount regularly allowed by the Com- pany are to be charged to my account. 7. That I am to receive a salary amounting to 15 per cent, of the amount of my collections each week, said salary to be known as " Ordinary Salary." 8. That in addition to the amount specified in clause 7 a "Special Salary" is to be paid to me, amounting to fifteen times the net increase of my collectible weekly debit. But should a decrease in the amount of my weekly debit occur, a charge of fifteen times the amount of such decrease is to be made against my account, "which charge can be offset by the production of further net increase in debit or by payment of fifteen times the amount of the decrease in cash. g,. To furnish to the Company, if required, a bond, in form and substance as prescribed by the Com- pany, to secure the faithful performance of duty on my part as Agent and with such surety as shall be approved by the Company. 10. It is expressly agreed that I am not to be entitled to any Ordinary or Special Salary until all the conditions and agreements contained in this contract have been fully complied with by me. 11. That the amount of the collectible weekly debit is arrived at by deducting the TOTAL amount of the weekly premiums on all policies entered in the Lapsed Policy Register from the TOTAL amount of the weekly premiums on all policies entered in the Life Policy Register. 12. Should business of any description be transferred to me, no Special Salary is to be paid on the in- crease in my collectible weekly debit resulting from such transfer, but only on the amount of net increase shown after deducting the amount transferred, and such transferred business, if subsequently lapsed, will not affect my Special Salary if reported by me for lapse at such time as to admit of the official lapsing for a date within the period prescribed by the Company's rules. 13. Should business of any description be transferred from my Agency, the decrease in my collectible weekly debit resulting from such transfer is not to be charged against my Special Salary, provided the business becomes chargeable, under this agreement, to the Agent to whom it is transferred. It is, however, expressly agreed that all policies officially transferred from my Agency, either during my term of service with the Company or after the termination of my employment by resignation, dismissal or otherwise, and reported for lapse at such time as to admit of the official lapsing without charge, under the Company's rules, against any Agent who has received the transfer of the policies, shall be charged against my account at the regular Special Salary rate of fifteen times the amount lapsed. 14. That if any business is transferred froia my Agency, and it is again transferred before the Agent who received it from me has held it long enough to become chargeable with it under this agreement, I am to be held responsible in case of its lapse, unless some one of the Agents who received it in transfer has retained the business long enqugh to become chargeable with it under this agreement. 15. That I am to be allowed to draw Special Salary only to the amount the character of the new busi- ness, after investigation, will in the opinion of the Company warrant. 16. That if my weekly collectible debit should decrease in any week, and I should subsequently claim salary on any future increase of business, it will only be payable upon the net increase from the last date the Special Salary was allowed. 17. That should the arrears on my account be deemed excessive by the Company or my collections below the percentage of the debit prescribed by the Company's rules the Special Salary may be withheld until the rules are complied with. THE PRUDENTIAL INS. CO. OF AMERICA, 1897-' 98. 243 the parties formerly insured would like to have the original policies rein- stated or revived, but lack the necessary funds to pay up the arrears. Until further notice, the following concession will apply in such cases : In the event of the insured under policies on which 52 or more contin- uous premiums were paid, prior to lapse, desiring to revive the policies, the Company will, if the applicants are unable to pay the whole arrears, accept a policy lien (which will not call for payment of interest) for the whole of arrears, if necessary, or for such part as they are unable to pay at the time of applying for revival. This concession applies only to policies /j or more weeks in arrears at time of application for revival. These policy liens may be cancelled during life-time by the insured, through pay- ment of the sum due the Company. They will form liens upon the policies, and the amounts represented shall be deducted from any payment becoming due under the policies. They will also form liens upon the legal reserve to the credit of the policies and may be deducted therefrom, before considering any paid-up insurance to which the insured might otherwise be entitled, in the event of the policies revived being subsequently lapsed. You can ap- preciate that this concession means a great deal to those interested, and we believe it will be warmly, welcomed by many of those who were obliged to discontinue their insurance in The Prudential. The form used in case of policy liens on lapsed contracts is reproduced as follows : INDUSTRIAL POLICY LIEN. Policy No 189 The undersigned has applied to The Prudential Insurance Company of America for a revival of Policy No. , on the life of , issued by said Company, and acknowledges that the arrears of premiums on said policy amount to dollars and cents, and agrees that in event of the revival by said Company of the said policy, the said amount will be a lien on said policy and will be deducted therefrom if said policy becomes a claim. Should a paid-up policy be issued in lieu of the above mentioned policy, the said amount of arrears of premiums will be deducted from the legal reserve to the credit of said paid-up policy, or any dividend additions or con- cessions that may hereafter accrue on said policy may be applied, at the option of the Company, to cancel or reduce the amount of this lien. It will readily be granted that the Company, in taking these important steps, had practically extended to Industrial 244 HISTORY OF THE PRUDENTIAL. policy-holders the loan privileges of Ordinary policy-holders, subject to certain modifications on account of elements inherent in the practice of Industrial insurance. Every possible effort had been made by the Company to encourage lapsed policy-holders to revive their policies or to assist those in arrears to keep their policies in force. Special instructions had been issued to agents from time to time, insist- ing upon special efforts to keep policies in force in cases where policy-holders had fallen in arrears, and from an article on the subject in The Prudential Weekly Record of August 9, 1897, I make a few extracts to illustrate the anxiety of the Company with reference to policy-holders in distress : A number of complaints have been made of late to us by policy-holders as to the arbitrary methods adopted by the Agents and Assistant Superin- tendents in reference to collection of premiums in arrears. The Prudential has builded its business upon good business principles, and one of these is the insistence that courtesy be shown to all connected with it. The Company recognized from the beginning of its career that occasion would arise when the policy-holders might not, for sufficient rea- sons, be able to meet the payment of premiums regularly, and provision for such contingency was made. When policy-holders fall in arrears, point out the danger to them and try to have the premiums paid up. Do not, however, display harshness. Accept premiums within the limit. \Ve do not complain if old polic}- -holders are a little behind. They will catch up when they can, and if properly treated will clear up the indebted- ness at the earliest opportunity. Educate the policy-holders in the matter of paying premiums start right with them ; use tact, good judgment, courtesy and there will be no complaints. To further encourage lapsed policy-holders to revive their policies, a new rule was introduced, under date of February 19, 1897, under which the Company assumed the expense of medical re-examination in all cases of revivals. Previous to this it had been the rule to have the insured pay the cost of the second medical examination, and occasionally cases had occurred where the expense had been a bar towards reinstatement, and, rather than place even so slight a hindrance in the way of policy re- vivals, the Company assumed the entire expense of such medical re-examinations. THE PRUDENTIAL INS. CO. OF AMERICA, igj-g. 245 An Intermediate policy was issued for the first time in 1897 in place of the former Special Adult policy, which had been discontinued under date of January ist, in view of the fact that the new concessions to Industrial policy-holders were of more value than the slight reduction in rates which had been the feat- ure of the Special Adult table. In communicating to the field force the views of the Company on this additional innovation, the President stated that It is our purpose to issue Intermediate Policies in our Ordinary Branch. These policies have been prepared to meet a demand which exists for plans of insurance adapted to the requirements of people who, by reason of physical excellency, personal and family history, financial condition, occu- pation, habits and environment, feel that they should be insured on terms somewhat more favorable than those of the regular Industrial policies. We expect, therefore, that our representatives will carefully select the risks they place before us for these Intermediate Policies, and aim to get only those who are more nearly up to the Ordinary rather than the Industrial standard. We wish it clearly understood that these policies are not intended for purely Industrial risks. We will not accept applications for Intermediate Policies on persons engaged in the manufacture or sale of intoxicants,* or from those employed in an establishment where explosives are manufactured. The premiums on these policies will be payable quarterly, semi-annually and annually, and will be the same for both men and women. * This class of risks is accepted in the Industrial department, subject to certain restrictions, as stated in the following extract from the Agents' Instruction Book : Saloon-keepers, bar-tenders and persons engaged in the sale of intox- icants will not be insured for more than $250 or thereabouts, and in all cases the age will be rated up five years. The Company does not wish any par- ticular effort made to get business of this class, but if applicants are taken, five years must be added to the actual age, and the amount of benefit for the higher age must be quoted. The highest premium accepted from per- sons engaged in this occupation at the various ages is shown below : ACTUAL AGE. LIMIT OF WEEKLY PREMIUM. 20 to 26 inclu 27 to 34 35 to 39 40 to 44 45 to 47 48 to 59 60 to 65 give 15 cents. 20 cents. 25 cents. 30 cents. 35 cents. 40 cents. 35 cents. 246 HISTORY OF THE PRUDENTIAL. An abbreviated copy of the Intermediate table is given below : PREMIUM RATES FOR A POLICY OF $500. WHOI/E; LIFE. AGE NEAREST BIRTHDAY. ANNUAL PREMIUM. SEMI-ANNUAL PREMIUM. QUARTERLY PREMIUM. 20 $10 97 $5 70 $2 9 I 25 12 55 653 3 33 30 14 22 7 39 3 77 35 16 42 8 54 4 35 40 19 02 9 89 5 04 45 22 52 ii 71 5 97 50 27 28 14 19 7 23 55 33 77 17 56 8 95 It will be observed, on examination of the extract from the President's letter, that applications for Intermediate policies were not to be accepted from persons engaged in the manufacture or sale of intoxicants or the manufacture of explosives. Many other dangerous or unhealthy occupations were, however, also prescribed against in the regular instructions sent to agents in reference to this class of policies. Among others, applications were not to be accepted from coal-miners, potters, asbestos workers, caisson workers, cement-mill employees, glass-blowers and gatherers, match-makers, mirror-makers, rubber-makers, smelters, starch workers, white-lead workers, etc., etc. These restrictions were based entirely on the then existing state of knowledge as regards the accident and disease liability of men employed in various occupations, and they have been subject to important modification as subsequent investigations have made a less restrictive practice possible. Thus, for instance, in conse- quence of a thorough investigation of the facts pertaining to men employed in American coal-mines, native coal-miners, on account of their lesser liability to fatal accidents, have been removed from the list of prohibited occupations. A similar investigation into the mortality of potters brought to light many previously un- known facts, on the basis of which it was possible to accept the larger proportion of men employed in this occupation. On account of the large number of lives under observation in the THE PRUDENTIAL INS. CO. OF AMERICA, l897~'98. 247 Industrial department, The Prudential has gradually accumu- lated a body of exceptionally valuable facts pertaining to the mortality of persons in different occupations, and in the light of its own experience it will be possible in the future, as it has been in the past, to make most important modifications in the method of dealing with applicants engaged in dangerous or hazardous occupations, and possibly with a class of sub-standard lives, now under special observation by the Medical department. The Company this year lost by death the service of another faithful employee, Mr. Thomas Haggart, Superintendent of the Denver District. I quote the following brief biographical sketch from The Prudential Weekly Record of September 27, 1897 : With great regret we are obliged to announce the death of Super- intendent Thomas Haggart, of Denver, Col. Mr. Haggart's career in the Industrial insurance business has been a notably successful one, and we can, without any exaggeration, say that in his death the Company loses one of the most faithful, loyal and progressive men in its entire service. He was a typical field man ; nothing suited him better than the varied and arduous work of carrying on a superintendency. He took the keenest delight in overcoming obstacles and difficulties ; in personally assisting and helping those of his Agents and Assistants in trouble. Mr. Haggart entered the service of the Company on September 8, 1882, and among the last things he was able to do was to sign for his gold medal for fifteen years' continuous and honorable service. Those of the older men in our service who had the privilege of knowing Mr. Haggart will fully appreciate the loss we have sustained, and, while we were prepared for it, through the long illness that preceded his death, yet the removal of so prominent a figure in our field operations comes as a shock to one and all. The results of the business operations during 1897 had been very satisfactory. The Industrial policy-holders now exceeded 2,658,000, while the policy-holders in the Ordinary department numbered 52,583. The assets had increased to $23,984,000, and the liabilities to $18,744,000, leaving a surplus of $5,240,000. In commenting upon the progress made by the Industrial companies during the year, the Baltimore Underwriter referred to Industrial insurance as " one of the wonders of the age," and from an article of some length I make the following extracts as an indication of the increasing appreciation of this form of 248 HISTORY OF THE PRUDENTIAL. insurance on the part of those best qualified to judge of its value from the standpoint of public policy : Industrial insurance has become one of the wonders of the age. The period of its active development in this country dates back only twenty-one years, yet the capabilities of the accretion of diminutive payments five and ten cents a week would be incredible were not the demonstration con- stantly placed before us. What it has wrought in such a brief period along the lines of thrift and saving, what it is doing from day to day in the alleviation of sorrow and misery in the homes of the poor and the lowly, the children of toil and pri- vation, we shall never know ; we can only faintly conjecture. It is hard to realize that in this wonderful business more than seven million policies are in force, that in its work of benefaction it is paying out fifteen millions of dollars annually, and that it gives employment to more than thirty thousand agents. It is doubtful whether, in the entire history of life insurance, any other single year represents efforts and results destined to bring about such vast and permanent improvements as must naturally follow The Prudential's policy of liberality outlined during 1897. In his annual review Mr. Dryden touched upon these points in his letter to the field force as follows : The year 1897 will be memorable in the history of Industrial Insurance, because in that year The Prudential Insurance Company inaugurated a new era by issuing an Industrial policy containing Cash Dividend and Insurance Dividend [Mortuary Dividend] features and promising liberal Paid-up and Cash-Surrender Values, a policy hitherto unknown in the Industrial Field. The magnificent amount of insurance written during the year just past, without any extra effort on the part of the Field Staff, is sufficient evidence that these great concessions have been appreciated by the insuring public. The year 1897, however, was marked by still greater liberality on the part of the Company, in that the concessions to the new policy-holders, as has always been the practice of the Company, were made to apply [equally] to its old policy-holders. Liberal Cash Dividends were paid on policies issued in 1877 and 1882, and Additional Benefits in case of death were paid on all policies on which five or more years' premiums had been paid. In every instance these dividends have been a voluntary concession not promised by the Company, not expected by the policy-holder. At the time these policies were issued, the fact of their eventually earning for their holders substantial dividends was wholly unlocked for. We have studied very carefully our experience as regards these divi- dends during 1897, and now believe that we can safely offer a similar con- cession for the year 1898. In 1897 the Cash Dividends applied to insurances amounting to $2,000,000 ; in 1898 they will apply to insurances of $3,000,000. THE PRUDENTIAL INS. CO. OF AMERICA, l897~'98. 249 In 1897 the Additional Benefits applied to insurances amounting to $130,- 000,000; in 1898 these insurances will amount to $150,000,000. In addition, the rate of the 1898 dividends is considerably higher than in 1897. So that the total amount of cash to be paid in 1898 will be almost double that of the preceding year. The year just past, both in Industrial and in Ordinary, has been one of which the agency force of The Prudential has every right to be more than proud. The character and stability of the great mass of the business placed on our books has been above criticism. The sterling worth and loyalty of our Field Force were never more in evidence than to-day. From these two sources, the nature of the business in force and the high standing of the men who have written that business, from the fact that The Prudential policy, whether Industrial or Ordinary, is the best policy for the people, and from the great impetus gained during 1897 in both branches of the business, we fully expect that from every desirable standpoint the year 1898 will be the greatest, proudest year of our Company's life. These extracts will make clear the Company's position and explain the far-reaching consequences involved in so distinct a step in advance as the granting of dividends and cash-surrender values to the holders of Industrial policies. And it may here be added that, though only two years have passed since The Prudential first commenced to place Industrial policy-holders on practically the same basis as Ordinary policy-holders, the Com- pany's experience has made it clear that it will be possible and expedient to continue in the future the same course of prudent liberality as has been the Company's practice in the past. How- ever satisfactory the results accomplished had been, it became more evident than ever that the Company's work had but just commenced, and that, in other words, vast opportunities were being neglected for the more rapid extension of The Prudential's business operations. While a very considerable number of persons had been insured, the efforts thus far put forward to reach all sections of the community had been less systematic and thorough than was necessary to produce the best results. Ac- cordingly, in the early part of the year it was determined to inaugurate new methods of placing the objects and aims of Industrial insurance before the public, and by direction of the Vice-President "a straight canvassing campaign" was com- menced, which has been productive of excellent results. To explain the meaning of this term it must be understood that in straight canvassing agents are required to visit every house, and every floor, and to solicit directly every adult member of the 250 HISTORY OF THE PRUDENTIAL. family, whether rich or poor, holding out inducements to insure on the Industrial, the Intermediate or the Ordinary plan of life insurance. I can not do better than quote from the Vice- President's letter of February 28, 1898, as follows : Your attention is called to a matter of paramount importance to Pruden- tial interests. We refer to the urgent need of more Straight Canvassing. Although the debits are well taken care of, and a proper amount of busi- ness written on them, the great mass of the population are not approached on the subject of Life Insurance by onr Agents. Thousands and tens of thousands of people in the different cities are never asked to take out Prudential policies, although they are in need of the protection our plans afford. The very foundations of the Company were laid by Straight Canvassing, and wherever it extends operations it depends on systematic house-to-house solicitation to acquire membership in the new territory. The Prudential must look to its Agency force for business ; one of the principal duties of the Agent is to canvass. An Agent who is a mere collector falls short of our requirements. We want those who collect promptly and canvass thoroughly, employing their time to the best advan- tage in forwarding our interests. We shall insist upon more Straight Canvassing than has been done of late, for we know it will be productive of much good to all concerned. The burden of responsibility will not all rest with the Agent. We shall expect Superintendents and Assistants to do their part ; the former to advise and plan, counselling and encouraging his subordinates, while the latter should give practical help to their Agents in the Field by assisting them in the work of canvassing. The Collections should be finished as soon as pos- sible, so that everybody may go to the Field and display that activity which will assure satisfactory returns. The Prudential Field Force are in splendid position for canvassing. The}' represent a sound Company, offering the best forms of policies, Industrial and Ordinary. Our men are backed up by liberal advertising. The name of The Pruden- tial is known through the length and breadth of this land, and if business be asked for it can be obtained. Straight Canvassing will prove very profit- able if our representatives but measure up to their opportunities. In old or new Districts the chances for business are good. No Field has been so well worked that more can not be secured. We trust to see a hearty and lasting response to this call for action ; that our representatives will awake to the possibilities of the occasion and be on the alert to grasp all the opportunity afforded to extend the circle of Pruden- tial policy-holders. To illustrate the thoroughness with which this work of straight canvassing was carried on, I reproduce below the report required of the superintendent on the results accomplished by THE PRUDENTIAL INS. CO. OF AMERICA, l897~'98. 251 both agents and assistants in addition to their regular duties of collecting the weekly premiums from the insured : L,ESr,iE D. WARD, ESQ., Vice-President. Dear Sir: I would report that Industrial applications, rep- resenting an aggregate in weekly premiums of $ , and Ordinary applications, representing $ of insurance, were secured in my District on straight canvass during the week commencing The Assistant most successful in Industrial was Mr. , in whose District applications, aggregating in weekly premiums , were written. The Assistant most successful in Ordinary was Mr , in whose District applications, representing $ of insurance, were written. The Agent most successful in Industrial was Mr , under Assistant , who secured Industrial appli- cations with weekly premiums aggregating $ The Agent most successful in Ordinary was Mr , under Assistant , who secured applications, representing $ of insurance. In a supplementary letter, the Vice-President pointed out that ' ' By the use of this report we will be able to keep in touch with the operations in your superintendency in straight canvass- ing, and this information will not only be of value to ourselves, but of advantage to those who show a disposition to meet our desires in this matter. ' ' Coincident with the attempt to extend the business operations of the Company by means of a more thorough canvass of the territory in which the Company's offices were located, a decided effort was made this year, and continued thereafter, to reduce to the lowest possible minimum the lapse-rate on old and new business. While it can not be too often pointed out that the larger portion of Industrial lapses is of policies on which practi- cally nothing has been paid, nevertheless more stringent rules were applied to the conduct of the business in this respect, and material results followed a practice which could not be developed to its present degree until sufficient experience had been gained. As has previously been pointed out, the lapse-rate of the Indus- trial business affects much more seriously the welfare of the companies than the welfare of the insured, as the majority of 252 HISTORY OF THE PRUDENTIAL. lapses represent a distinct loss to the former. Therefore, by insisting upon the watch -word that ' ' The business that stays is the business that pays," agents were induced to devote more time and attention to the writing of business which from the outset gave every indication of being a permanent addition to the Company's insurance in force. However successful The Pruden- tial has been in this respect, it will nevertheless be at all times a most difficult and serious problem to avoid a large number of lapses in the active efforts to materially increase or extend the business. Lapses very largely represent bookkeepers' statements made for actuarial purposes, and are really no financial loss to the insured, who, for a time at least, have enjoyed a certain amount of insurance protection. All lapses during the early policy years represent a loss to the Company, are detrimental to the business in general, and constitute a problem to the solution of which the Company's best efforts and thoughts have been devoted from the day the first application for Industrial insurance was received, on November 10, 1875. Some of the points previously touched upon in Mr. Dryden's letter of January ist were reiterated in his address at the Com- pany's banquet at the Waldorf-Astoria on February 10, 1898. I make a few extracts from this address, which forms one of the most interesting contributions made to the literature of the Company's history during recent years : In this period of two years the Company has perfected and introduced to the American public an Industrial policy which stands in the very fore- ground as the most equitable, the fairest and the best policy for the masses of this Republic. Whether the comparison be limited to companies of this American continent, or to those great companies which we respect across the sea, it stands far in advance. For the first time the holder of an Industrial policy under The Pru- dential's system and practice stands practically on an equality with the holder of the Ordinary policy. We have recently done another thing, the results of which rest with you and not with us. We have determined to put every Industrial worker upon his honor and forego the requirement for a bond. We say to him in effect that we believe him to be a gentleman and an honest man, and shall treat him as such until he proves himself unworthy of it. We stand here to-night, gentlemen, with a record behind us of twenty- two years. That is the span of this Company's life. The figures of most of the companies of the country are not as yet obtainable for this year. Of the sixty companies mentioned in the "Spectator Pocket Index" of last THE PRUDENTIAL INS. CO. OF AMERICA, l8gj-<)8. 253 year, fifteen were of the same age or younger than The Prudential. Of those fifteen but one or two had as large an income for the entire year as The Prudential had in two weeks. Now I think, gentlemen, that there are some fundamental reasons why this fact is as it is. In the first place we introduced a system of business here twenty-two years ago, new to our people, but which met an existing need. We have tried sincerely and conscientiously to adapt that system to the condition of our people. We have endeavored to establish underneath all, at the very base of the Company, the underlying principle of equity and right, and have tried to inculcate among our friends and workers the belief that no matter who the party may be, however humble his position, whether policy-holder or servant, he shall have fair, liberal and honest treatment. And upon that line our business must continue. Those who have carefully followed the writer in his survey of the early and present-day conditions, as relating to the growth and development of The Prudential, will agree that the words of Mr. Dry den are fully justified by the facts. I feel satisfied that this conviction rests equally strong with the millions of policy-holders of the Company, who are to-day, as they have been in the past, the most faithful believers in the destiny of The Prudential. On February 15, 1898, occurred an event which has since become history, and to which, no doubt, must be largely attrib- uted the war of the United States with the kingdom of Spain. In the explosion of the U. S. Battleship Maine, this country lost the lives of 253 men whose memory is consecrated to a noble cause. Among the country's heroes few, if any, will ever be held in higher esteem and more affectionate regard. Of those who perished in the disaster, seventeen sailors and marines were insured with The Prudential, holding twenty-one Industrial poli- cies for an aggregate sum of $3,529. It has seemed to me fitting to incorporate into this work the names of those who proved them- selves their country's heroes in peace as well as in war. Those who hold and believe that peace has its victories as well as war, and who accept the modern dictum of social morality, that those who provide for themselves and their dependents through the medium of life insurance are deserving of the highest praise, will readily concede that the names of those here permanently placed on record are deserving of greater honor than those who thoughtlessly shirk one of life's imperative duties by making no provision for life's contingencies on a plan and by a method 254 HISTORY OF THE PRUDENTIAL. fully within the reach of every one, no matter how humble or how poor* : NAMES OF POLICY-HOLDERS OF THE PRUDENTIAL WHOSE LIVES WERE LOST IN THE EXPLOSION OF THE U. S. S. " MAINE," FEBRUARY 15, 18984 1. C. Hauck, Landsman, Brooklyn. 2. W. Hamberger, Landsman, Jersey City. 3. E. P. Graham, Coal-passer, Jersey City. 4. R. Wilson, Chief Quartermaster, .... Brooklyn. 5. H. J. Gross, Landsman, New York. 6. T.J.Jones, 2 Coal-passer, Brooklyn. 7. J. H. Dierking, Drummer, Brooklyn. 8. T. M. Cole, Bayman, Philadelphia. 9. M. F. Harris, Quartermaster, New York. 10. T. Clark, Coal-heaver, Newark. n. F. L. Jernee, Coal-passer, Newark. 12. F. F Butler, Machinist, Harrison. 13. T. J. Quigley, Plumber, New York. 14. A. J. Holland, Quartermaster, Brooklyn. 15. H. Auchenbach, . . . .Fireman, Sheridan, Pa. 16. F. C. Holzrier, .... Seaman, New York. 17. J. J. Shea, 2 Coal-passer, New York. 1 Had three policies. * Had two policies. While it was not until April 2 1 st that a state of war was declared to exist between the United States and Spain, as early as April Qth Mr. Dryden addressed a circular letter to the field force with reference to permission to the Company's policy- holders in the army or navy of the United States or the militia to serve in time of war. I quote from the letter the following extracts, to indicate the Company's practice in dealing with war risks in both departments of the business : In consequence of the present unsettled state of National affairs, a number of inquiries have been made as to the course The Prudential would take with regard to those policy-holders who may serve in the Army or Navy of the United States or the Militia in time of war. The question is a serious one, in view of the large number of policy- holders of The Prudential who might be affected by an outbreak of war. After careful consideration, we have decided as follows : As to all policies, whether Industrial, Intermediate, or Ordinary, which may be in force at the time of declaration of war, permission is hereby given * The only American sailor killed in the naval battle of Santiago on July 3, 1898, George Ellis, Chief Yeoman of the Cruiser Brooklyn, was insured in The Prudential under an Industrial policy. f Appendix to the Report of the Chief of the Bureau of Navigation, p. ii et seq. Wash., 1898. THE PRUDENTIAL INS. CO. OF AMERICA, l897~'98. 255 for the insured under such policies to serve in the Army or Navy of the United States, or Militia of any State of the United States, in time of war, and no written permission for such service need be obtained from the Company, nor will any extra premium be charged. It will not be necessary to send in any policy for endorsement. It will be observed, on examination, that permission was granted by President Dryden to the then Prudential policy-holders to serve in the army or navy of the United States, or the militia, without the charge of an extra rate, and to facilitate matters no written permission for such service was required. These rules and regulations were supplemented by a circular, dated November 17, 1898, with reference to prospective policy-holders. in the Ordinary department, but want of space forbids an extended discussion here of an interesting phase of life-insurance history. As a further matter of permanent interest, I give below a table showing the Company's Industrial war mortality experi- ence, from February 15, 1898, to December 31, 1899, and includ- ing the loss of life caused by the explosion of the Maine : WAR MORTALITY EXPERIENCE, 1898 AND 1899. INDUSTRIAL, DEPARTMENT. No. OP POLICIES. AMT. OF INSURANCE. Lives lost by the explosion of the Maine 21 Deaths from battle and disease In the United States, in hospitals and army camps, On Transports, 148 Poio-'y "" 22,411 oo 762 oo In Cuba 2*\ In Puerto Rico, ... -*o jr In Hawaii, o In the Philippine Islands, IO u o/ w 2 889 OO Total deaths, 218 ^jc cnR oo *JW iPoOO uc> "^ Another aspect of the disturbed state of national affairs resulting from the war with Spain, and directly affecting the interests of Industrial policy-holders, was the passage of the War Revenue Tax Act on July i, 1898, providing that policies issued on the Industrial weekly-payment plan should pay a Revenue Tax of 40 per cent, of the first weekly premium, being equal, in 256 HISTORY OF THE PRUDENTIAL. other words, to a tax of four cents on every ten-cent policy issued by the Company, irrespective of the fact whether the policy was actually placed or not. Ordinary life policies were taxed eight cents for each $100 or fraction thereof of the amount of insur- ance. With reference to the Revenue Tax on Industrial policies the subsequent practice of the Company was outlined in a letter of the President, dated July 2, 1898, stating that the Company would bear the entire expense of the war tax on the Industrial business. With reference to Ordinary policies, a letter, under date of June 28th, informed the members of the field force that the revenue stamps would have to be paid for by the prospective policy-holders, but, under date of October 5th, this was modified in the manner that on and after that date, until otherwise directed, the Company would also pay for the revenue tax on Ordinary policies.* *A tax on insurance, according to Mill ("Principles of Political Economy," Book V., Chap. VII.), " is a direct discouragement of prudence and forethought," and few have tried to defend it as a means of raising revenue, except on the ground of political expediency. One of the ear- liest writers on the subject well expressed the views held by economists and life insurance managers that ' ' A tax on insurance is a tax not only upon industry, but upon prudence and frugality, and the American system seems to be far worse than that of which we have been so long complaining in Great Britain in respect of Fire Insurance, and which, by such com- plaints, we have recently compelled our Government to a large extent to forego." (Sir S. Morton Peto in "Resources of America," p. 377. Lon- don, 1866.) An equally emphatic statement to the same effect is to be found in the Insurance Times of 1868 (p. 169) on the Internal Revenue Acts of 1862 and 1864 : ' ' This is probably necessary for the present, although all taxes on prudence are open to serious objection on principle and ought to be dropped as soon as possible. * * * * A man may save from his income and be the better and richer for it, but what statesman would wish to compel citizens to economize in insurance?" Charles Sumner, also, according to the Insurance Monitor of April, 1884, " who had examined the subject in his usual thorough and conscientious manner," well said that " the proposition to tax life insurance was an attempt to impose a tax upon a tax," but this view, unfortunately, has found favor with but few legislators, who are, generally speaking, either ignorant of, or indifferent to, the fact that taxes on life insurance are, as a matter of course, paid by the policy- holders. As a pertinent illustration I may add the statement that in 1899 The Prudential paid $448,855 in taxes and license fees, all of which would otherwise have been returned to the policy-holders in the form of increased dividends, larger additional benefits, or increased cash-surrender values. THE PRUDENTIAL INS. CO. OF AMERICA, l897-'98. 257 A very material improvement was made in the payment of Industrial claims, of which earlier mention would have been made but for the continuity of events connected with the war measures adopted by the Company for the conduct of the business. Under date of April 4th, the Vice- President of the Company communicated to the field force new instructions with reference to the payment of Industrial claims, which I can not do better than quote in an abbreviated form : INDUSTRIAL CLAIM PAYMENTS. The Prudential was the first Company in this country to pay death claims immediately upon receipt of proofs of death at the Home Office. We have now decided, in keeping with the Company's settled policy of doing the most good in the most practical way, to take a step still further in advance. Even the slight delay of sending the claim papers to the Home Office and the time necessary for the check in payment to reach the Field means a great deal to the bereaved family in a time of distress. To overcome this delay we are going to entrust you with the payment of all claims not exceeding $130 on Regular White Industrial policies imme- diately on completion of the usual proofs of death, and before forwarding the papers to this office. For the present, claims on colored lives, Endow- ment policies and all claims amounting to more than $130 are to be for- warded in the usual way, and, after examination at this office, if they are to be paid without further correspondence, we will telegraph you what amount to pay. All doubtful claims must be referred to the Home Office. We feel confident that you will appreciate the responsibility of this change and exercise the same care that you would if every dollar you paid out belonged to yourself. The same forms will be used as heretofore, and must be completed be- fore payment is made. The policy must be produced in every case ; if a duplicate is submitted, no payment shall be made until you have satisfied yourself that the original is not in existence. Cases where no policy is pre- sented must be referred to this office. Careful investigation must be made as to the insurable interest of claimant in accordance with Rule 4 for the adjustment of claims, and doubt- ful cases must be referred to the Home Office. All claims on policies bearing an endorsement other than for additional insurance, revival lien or change of age, should be sent to the Home Office for adjustment. Insurance in Other Companies. In case of Infantile policies where there are other insurances in other companies and the total amount of pre- mium exceeds ten cents, they should be referred to the Home Office. After investigation of a claim, if you are perfectly satisfied that it is a valid one, you may draw a check to the order of the claimant on the form herewith sent you, against our deposit in the bank. The check must be en- dorsed by the claimant and presented for payment in the usual way. The 258 HISTORY OF THE PRUDENTIAL. proofs of death should contain amount paid, date of payment, check number, and, with claimant's receipt attached, be immediately forwarded to this office. In addition to explicit instructions governing the immediate payment of Industrial claims to the local representatives of the Company, a telegraphic code was adopted for use in the payment of claims by telegraph, and it will thus be apparent that the Company adopted every possible means of improving its relation with policy-holders in this direction. Under date of November 4, 1898, after the system of immediate claim payments for certain amounts had had a sufficient trial, it was decided to make the limitation for such payments $200, instead of $130, which had previously been the limit. The method adopted met with uni- versal approval among the Company's beneficiaries, and expe- rience, now extending over a sufficient period of time, has made it clear that the step taken was a wise one, and, thus far, there has not been a single instance in which the Company's liberal practice has been abused. Among other improvements made in the administration of the Company's business was a change in dealing with lapses on Industrial policies in cases where Ordinary insurance had been secured by the same agent to take the place of the Industrial. It must be understood that agents are held responsible for lapses to the extent that they are required in all cases to make a net increase in their business in force, and they have therefore to replace, without compensation, by new policy-holders, old policy- holders who, for one reason or another, may have lapsed their policies. This practice is warranted by the inseparable condition of the Industrial field administration, that only by holding the agent personally responsible can unnecessary lapses be avoided, and there is in this practice absolute proof that the Company is sincere in its assertion that at all times everything possible has been done to avoid lapses and retain policies on the books of the Company. However, with the development of Industrial- Ordinary insurance, that is, the extension of insurance prin- ciples to the more prosperous elements of the population, frequent instances came to the notice of the Company where Industrial policies were surrendered for Ordinary policies taken out in their place. To facilitate this form of transfer and place THE PRUDENTIAL INS. CO. OF AMERICA, l897~'98. 259 no hindrance in the way of a material improvement in his insur- ance contract on the part of the Industrial policy-holder, the Company, under date of March i6th, over the signature of the Vice-President, informed the field force as follows : INDUSTRIAL-ORDINARY LAPSE. We have been solicited, on several occasions, to release an Agent from the lapse of an Industrial policy in cases where Ordinary insurance has been secured by the same Agent to take the place of the Industrial. Generally speaking, an Industrial policy-holder, who decides to take out Ordinary insurance with us, concludes, also, to retain the Industrial policy in force, looking upon the amount insured thereunder as a burial fund, the new policy being regarded in the light of an estate. This is a view of the matter to be encouraged, for it seems to be the right one. It may occasionally happen, however, that the lapse of an Industrial policy is involved in the issue of the Ordinary. While we can not see our way clear to releasing the Agent from the Industrial lapse where the insured takes out Ordinary insurance on the quarterly or semi-annual premium plan, we shall be willing to grant a release from the lapse of the Industrial policy, provided the insured takes out the Ordinary insurance under the annual premium plan. You may instruct your Agents to this effect, urging upon them, how- ever, the advisability of trying to keep both forms of insurance in force. With reference to the last sentence it may be explained that the principal object of an Industrial policy being strictly to meet burial expenses, it has been found by experience that in many cases, where Ordinary insurance is subsequently taken out by original Industrial policy-holders, the Indus- trial policy is kept in force as a burial provision, leaving the full amount of the Ordinary policy for surviving members of the family. A change was made this year in the issue of Industrial poli- cies which was also a decided and important step forward, and one which marks a still further advance over the methods employed by other companies. It had heretofore been the practice to date new Industrial policies on the Monday of the week following that in which they were sent out. This practice was changed under date of March 28th, and the field force was informed by a cir- cular letter from the President that Commencing with the policies sent to the Agent to be included in his debit for April nth [1898], we shall make the date the Monday of the week 260 HISTORY OF THE PRUDENTIAL. the applications were approved at this office. Thus in return for applications obtained during the canvass of the week of March 28th, if they reach the Home Office on April 4th, and are there approved, we shall issue the policies bearing date of April 4th, instead of April nth, as under the present plan. The advantages of this method will be apparent at once. The Agent in canvassing can promise insurance at an earlier date than now. He can place his business without the delay which at present occurs, and follow the same up and keep in closer touch with the applicants, collecting from them each week as the premiums, if the policies are not granted, will be returned, while if issued they are in benefit at the earliest practical oppor- tunity. In consequence of this concession new policy-holders were placed in immediate benefit for at least a portion of the face value of the policy practically from the date application was made. Only those familiar with the actual operations of an Industrial agency can fully realize the importance of this step taken by The Prudential in advance of other Industrial companies. An apparently slight, but actually very important, change was made this year with reference to charges for premium receipt- books. It had heretofore been the practice to charge policy- holders for the premium receipt-book which accompanies the policy, and in which the weekly premiums are entered by the agent, but under date of August i2th the field force was informed that thereafter no charge would be made for premium receipt-books, but that the Company would expect agents to use the same care in ordering and disposing of these books as under the system formerly in force. When it is considered that the Company annually makes use of a vast number of such books, the individual payment, however small, assumes considerable proportions in the aggregate, representing a not inconsiderable loss to the Company, which once more was assumed for the gen- eral welfare of the business and the best interests of the policy- holders. With reference to the payment of Industrial Cash Dividends, it had been the practice of the Company to have the policy-holders call at the office of the Superintendent and collect personally the amounts due as dividends under such policies. To facilitate matters it was decided, under date of August 4, 1898, to have these dividends paid at the houses of the insured by the Assistant THE PRUDENTIAL INS. CO. OF AMERICA, l897~'98. 261 Superintendent, and the views of the Company were outlined in the following letter of the Vice-President : INDUSTRIAL CASH DIVIDENDS. It is our desire to pay these dividends as promptly as possible and with- out causing any inconvenience to the policy-holders. If this be done, we shall insure the greatest good to The Prudential and its representatives that can come through the liberal action of the Company. As a means to this end, you are authorized to have these dividends adjusted by the Assistant Superintendents calling at the home of the parties to whom dividends are payable, and there making the proper settlement. Whenever it is practicable so to do, you should try to save the policy-holders, and others interested, the necessity of visiting your offices. If the parties wish to have the payment in cash, in preference to other method of settle- ment, no undue pressure should be brought to bear upon them to change their minds. Let the adjustment be made in the manner most satisfactory to the members. We think, if proper care be exercised to see that our instructions as to the method of adjusting dividends be carried out, the work can be safely entrusted to the Assistant Superintendents. If you should find it expedient so to do, you may occasionally use the services of your reliable Agents, so as to relieve the Assistant Superintend- ents when their other duties are pressing. We shall, of course, expect you to look closely after the matter, so as to fully protect us. This step is one fully in harmony with the theory of Indus- trial collections, in that experience has made it clear that working people are not in a position to leave their homes or workshops for the purpose of paying premiums or even for the occasional collec- tion of dividends, and, to overcome possible objections to the Company's early rule to have Cash Dividends paid at the office, of the Superintendent, the same was modified to meet the wishes of the public for the payment of dividends at the homes of the insured.* * The collector in Industrial insurance is a necessity, it being one of the essential principles of the business that the weekly premiums must be col- lected from the house of the insured. Many as have been the efforts to eliminate the collector, by holding out inducements to the insured to pay at the office, by offers of a reduction of the premium, all such attempts have proven a complete failure. It has been brought out time and again in par- liamentary investigations that without the collector the entire system of trading friendly societies would fall to the ground, and that one of the pri- mary causes of the failure of Government insurance in England is to be 262 HISTORY OF THE PRUDENTIAL. Among the Company's business achievements during 1898 mention must be made of one of the largest transactions ever consummated in Partnership Life Insurance in the United States. A policy was issued during the month of October for $400,000 for Partnership insurance on the four members of the firm of Hahne & Co. of the city of Newark. The annual premium on this policy was $13,221, the check for which was dated October 20, 1898. The firm of Hahne & Co. owns the largest depart- ment store in the State of New Jersey, having, much like The Prudential, developed from small beginnings into a structure of vast proportions. Before deciding in what company the firm would seek the insurance protection referred to, the leading life companies of the country submitted their propositions. No pol- icy, however, so completely satisfied the members of this firm as the contract of The Prudential. It is something very considera- bly to the credit of The Prudential Insurance Company that, in open competition with all of the long-established old-line companies, it should have been possible for an institution, developed largely for the purpose of extending the principles of insurance to the industrial population, to consummate this year a transaction which ranks as one of the largest and most impor- tant in American life-insurance history. Aside from the increasing public appreciation of Industrial and Ordinary insurance as offered to the public by The found in the fact that the Post-office does not employ collectors to call for the weekly premiums at the homes of the insured. The fact must not be overlooked that many of the Industrial policy-holders hold policies for a weekly premium of but five, ten or fifteen cents. Living, as these people do, sometimes miles from other habitations, it naturally becomes a seri- ous question how to protect properly the individual interests of every policy-holder. Experience has shown that it is only by means of the " debit " system of the Industrial companies and the payment of a reason- able commission that this function can be properly discharged. While in Ordinary insurance the renewal commissions on payments made at the office of the agent are often as high as 7^ per cent., in Industrial insur- ance the agent receives 15 per cent, for calling fifty-two times a year for the premiums at the homes of the insured, irrespective of the distance the policy-holder may live from the office. If to this amount of necessary labor is added an additional amount of effort required to call more than once when the insured may not be at home or not be in a position to pay the premium, it will readily be conceded that the commission paid for the col- lection of the weekly premiums is not an unreasonable one. THE PRUDENTIAL INS. CO. OF AMERICA, l897~'98. 263 Prudential, official opinion was now more than ever strongly and emphatically in favor of life insurance for the masses on the Industrial plan of The Prudential Insurance Company. limiting myself to a single extract from official literature, I quote as follows from the 26th annual report of Mr. John C. I^inehan, Insurance Commissioner of New Hampshire : The industrial branch of life insurance has been put through a severe test during the past year, especially the feature devoted to the insurance of children. Some three years ago an attack was made upon it by a local paper, and the statements made at the time were of such a character that an in- vestigation was deemed necessary. The opinions of gentlemen who were not interested in the business, but whose professions gave them opportunities to study its effect, were sought for, and in every instance their reply was that it was a great blessing, for in many instances it was the only kind of protection working people could afford to carry. Industrial insurance furnishes one of the greatest benefits that can be received in return for the amount paid, for very often, in case of death, the insurance is all there is left, either to bury the dead or provide for the living. A careful consideration of the subject, as well as of the figures given, and the circumstances from which industrial insurance originated, must convince all fair-minded men that the business is not only legitimate and honorable, but just as essential to those among whom it is operated as the other kind is among those more favored with the good things of this world. To this recognition of Industrial insurance from the stand- point of public policy, I may properly add the following tribute to the good work of life-insurance agents in general by the late Rev. Phillips Brooks : One of the greatest blessings of the vocation of Insurance agents is that they eliminate a great deal of the worry of life ; they rid men of a great many of those distressing and carking troubles that keep them from living their true lives. * * * * I fancy there is no profession that profits so much by the great work that life-insurance agents are constantly doing as the profession of the ministry. By it they are set free to do what they are commissioned to do, careless how long life is going to last, sure that God will care for those they love, because in His Providence He has led men to organize this great interest of life insurance for their protection. What Bishop Brooks said of life-insurance agents in general applies with special force to the daily labor of the vast army of Industrial agents, carrying into the homes of the industrial mil- lions the teachings of a quarter of a century of insurance efforts 264 HISTORY OF THE PRUDENTIAL. and results, and completely fulfilling Mr. Dryden's early ambi- tion, to make a success of Industrial insurance in America along the same lines which made possible the gigantic success of Sir Henry Harben's scheme in his half -century management of The Prudential Assurance Company of London. I have purposely refrained in this work from making more than incidental mention of the large number of letters of thanks and appreciation which constantly reach the Company from bene- ficiaries under Industrial policies, but I here include a short letter which is so full of pathos and indicates so clearly the beneficent mission of Industrial insurance, that I reproduce the same in full as quoted in The Prudential Weekly Record of October 17, 1898 : PHILADELPHIA, PA., September 27, 1898. To JOHN F. DRYDEN, ESQ. Dear Sir: I would state that I have received the money on policy 662,025, being $187.95. I was very much pleased at your promptness in settling up my claim, as I was in need of money to bury my wife, and without that assistance the county would have had to bury her, as I have been out of employment for months, and I can assure you, Mr. President, that I highly appreciate your kindness and consider your institution as the real " Savings Bank" of the poor people, and whenever or wherever I can say a good word for it I will do so with pleasure. I remain, Yours very respectfully, 2012 South Gratz Street, ROBERT MACCLERMONT. 36th Ward, Philadelphia. The results of the year 1898 had been exceedingly satis- factory. In the Industrial department the number of policies had increased to 2,924,526, for an aggregate amount of Indus- trial insurance protection of $333,992,200. In the Ordinary department, under the new system of making each representa- tive of the Industrial also a representative of the Ordinary department, the business had been increased to 71,927 policies for an aggregate amount of $80,554,853 of insurance protec- tion. Corresponding increase had been made in the assets and surplus of the Company, while the total annual payments to policy-holders during the year reached the colossal sum of $5,389,403. The actual premium income of the Company from both the Industrial and Ordinary business exceeded $i 6,000,00x3, while the total income, including interest, etc., was $17,481,876. THE PRUDENTIAL INS. CO. OF AMERICA, l897~'98. 265 The results of the year's business operations had therefore been very gratifying and had proven a most emphatic public endorse- ment of the Company's conservative policy of a prudent liberality in dealing with its policy-holders in its own way according to the light of its own experience. In his annual letter to the field force for the year 1899, Mr. Pryden, under date of January i, 1899, commented upon the excellent record made during the preceding year, and, in words which are deserving of being reproduced, once more empha- sized the importance of reducing the lapse-rate : ' ' The Company desires and is striving to keep the lapses down to the minimum, and everything within the rules of the Company must be done to keep the membership intact. When it is finally decided that premiums can not be collected, see that Paid-up Policies (if the insured are entitled thereto) are applied for." Thus the Com- pany's interest in its policy-holders is made manifest by its rules, under which agents are not only required to put forward every effort to keep policies in force, but in cases where the lapse of the policy is inevitable special efforts must be made to protect the interests of the insured, and it may be said, with all the emphasis which it is possible to put into words, that not a single policy has ever lapsed which, as far as it was within the power of the Company, would not be on its books to-day, had advantage been taken of the exceptional opportunities given for revival or reinstatement. With special reference to paid-up policies, the President stated in his letter that "The number of Paid-up Policies in force upon our books is now 82,984, covering insurance for $3,690,205. The number issued during 1898 was 33,619, representing insurance for $1,670,360." In commenting upon the exceptional record made in the Ordi- nary department, in which there had been a net increase of $21,000,000 in the insurance in force, the President paid the following graceful tribute to the field force : ' * These facts and figures tell of the steady and permanent devotion and loyalty to the Company' s interests, on the part of the field staff, that we have long maintained can not be paralleled by any other company " 266 HISTORY OF THE PRUDENTIAL. CHAPTER XV. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, 1899. By January i, 1899, The Prudential had achieved results which are practically without a parallel in the history of American life insurance. The experiment commenced in 1875 had been developed into a success of gigantic proportions. Where once there had been a question of doubt, where once the voice of pessimism had been ready to decry this early effort to extend the principles of genuine life insurance to the masses, every compe- tent critic and financial authority now readily conceded to the founders of Industrial insurance the foremost position in the life insurance world. Among others the Insurance Monitor, in a brief reference to the results achieved by The Prudential during 1898, related the following instance of well-deserved approval : ' ' We heard some high praise of the Prudential officers the other day, from one of the leading lights in life insurance. The officers of The Prudential have long realized that Industrial insurance must be conducted in the interest of the masses, and any action which would seem to them likely to be construed otherwise would be pretty sure to meet with their disfavor. It was the personal appeals and arguments of President Dryden to the industrial classes, for their own interest, that laid the foundations of the business in this country. He is studying that interest to-day. ' ' To these remarks I add an extract from the Camden Daily Telegram of January 27, 1899 : The twenty- third annual statement of the Company, issued the first of this year, gives to its policy-holders in a concise, business way, a clear insight into its present and remarkable continued healthy growth. The in- vestments are wisely and prudently made by experienced, able and honest financiers, who give their undivided time and abilities to the interests of the Company, at the head of which stands the President, John F. Dryden. Though at the head of an efficient staff which renders him such valuable support, yet much of the unprecedented success of The Prudential is due to the hard work, rare financial qualifications and sagacity of its President, THE PRUDENTIAL INS. CO. OF AMERICA, 1899. who has perfected its organization until it is now like a completed machine, independent of the direction of a single head for its future smooth running. Such has been Mr. Dryden's great ambition, and, while he has lived to see its fruition, there is every prospect that he may enjoy it for many years to come. The people of New Jersey are justly proud of the fact that this great institution was founded in their State, though its business has so long since outgrown the confines of any specified locality or country. The home office in Newark legally designates it as a New Jersey corporation, while as a taxpayer it is one of the largest contributors to the State Treasury, and outside of railroads the largest, its assessment last year, promptly paid, being no less than $96,980.42. This sum does not include municipal taxes, which it pays direct to Newark. It is but proper that mention should be made here of a factor of not inconsiderable importance in making for the great success of The Prudential in the Ordinary department. Sometime during 1896 The Prudential Company commenced the use of a striking advertisement in the nature of a reproduction of the Rock of Gibraltar, across the face of which, in bold letters, appeared the motto "The Prudential has the strength of Gibraltar." This advertisement is to-day considered the most striking one of its kind, and by this means the name of the Company has become more than ever a household word throughout the entire country. By a curious coincidence this advertisement proved the fulfill- ment of a singular prophecy already referred to in the earlier part of this work.* The Newark Morning Register of Novem- ber 13, 1875, concluded an editorial on the new aspirant for life- insurance honors in America with the statement that ' ' The Society may be said to be founded upon a rock. ' ' It was pointed out in The Prudential Weekly Record of July 31, 1899, that it was no longer the whole truth that the Company ' ' may be said to be founded upon a rock," " for there is now no may be about it. It is now an established fact, one that is not only unques- tioned, but absolutely unquestionable, that The Prudential is 'founded upon a rock,' and stands to-day, in its way, equally a synonym and symbol of strength and impregnability with the renowned stronghold that, a little more than a century ago, successfully resisted a four years' siege." It will be granted, I believe, that seldom has an advertisement so completely * Ante, p. 58. 268 HISTORY OF THE PRUDENTIAL. represented a business organization and its past history in so concise a phrase as ' ' The Prudential has the strength of Gibraltar," for of few companies or business organizations can it be said, in the light of the history which is here given in as much detail as limited space will permit, that it was built on solid foundations, and with the fixed determination that on such foundations a structure should be reared which should stand antagonism, opposition, the most fierce competition, and the inevitable changes of time. Whik perhaps a quarter of a cent- ury is too short a period to demonstrate the permanency of such an institution as The Prudential, it must not be forgotten that, aside from its financial security and foundation on correct prin- ciples of finance and the law of mortality, the Company rests equally secure in the affection and regard of more than three and a half millions of loyal policy-holders, and almost 15,000 em- ployees whose steady and permanent devotion and loyalty to the Company's interests, in the words of Mr. Dryden, "cannot be paralleled by any other company." As an illustration of the continued increase in the popularity of the Company, mention must be made of a very important trans- action that occurred during the latter part of the month of De- cember, 1898, and to which extended reference was made in The Prudential Weekly Record Q! January 2, 1899. The firm of Mont- gomery Ward & Co., of Chicago, had effected an arrangement with the Company by which whole-life policies were written upon the lives of 150 of the married employees of the firm. The poli- cies were presented as a Christmas gift, one year's premium having been paid thereon in full. In referring to this transaction, The Prudential Weekly Record stated that ''The firm selected the regular policies issued by The Prudential as the best they could find in the market for the purpose desired. In a letter of presen- tation accompanying each policy the firm said : 'As to the Com- pany and plan, we selected The Prudential because of its strong financial standing, coupled with the great liberality of its policy contract, with its incontestability, loan and surrender values, automatic non-forfeiture, etc.'' The transaction naturally attracted considerable attention, and must be classed as one of the important events in life-insurance history. Influenced, no doubt, by the Montgomery Ward example, the Ithaca Daily News, during the latter part of the year, THE PRUDENTIAL INS. CO. OF AMERICA, 1899. 269 completed an arrangement with The Prudential for insuring its employees, including even the carrier-boys, under policies in the Industrial department of the Company, all the premiums being paid for a period of some months by the newspaper, thus offering a direct incentive to its employees to make an insurance provision against death and other contingencies, on the Industrial plan. A determined effort was made this year to increase the efficiency of the field force by improved methods of ' ' straight canvassing," and special straight canvassing agencies were established independent of the regular local offices, with an exceptional degree of success. In referring to the subject under date of March I3th, the Vice-President, in direct charge of the vast field operations, addressed the superintendents in a letter, from which I make a few abstracts : In order that you may thoroughly understand what we mean by the term A Straight Canvassing Superintendent, Assistant or Agent, we would state that each should start absolutely without debit* and receive no transfers whatever. We propose to appoint Superintendents without debits in every locality where we think the conditions warrant it, providing suitable men are available. If a Superintendent feels that he cannot make a success of this feature of the business, we advise him not to undertake it ; but we have already demonstrated in a number of cases that Superintendents, Assistants and Agents can succeed under the conditions set forth. This letter was supplemented by another communication, dated March 3ist, in which the question of agency compensation under the new arrangement was dealt with in detail. I quote * The term " debit " is applied to the total amount of weekly collect- ible premiums charged against an agent and for which the latter is respon- sible. A " debit " is determined by deducting from the premiums of the total number of policies issued or transferred to an agent the premiums of the policies terminated by reason of lapse, transfer or death. If, for ex- ample, $80.00 of weekly collectible premiums have been issued to the agent and $12.50 have been terminated for some reason or other, the agent's ''debit " would be $67.50. This amount of premiums the agent is expected to collect and in return he is paid a commission of 15 per cent., which is termed "ordinary salary." In a general way it may be said that the average collection will reach from 98 to 99 per cent, of the weekly collect- ible debit, while the average debit is approximately fifty dollars. 270 HISTORY OF THE PRUDENTIAL. from the letter of the Vice- President a few passages of more than passing interest and importance : The magnificent support which has been given this movement through- out the Field, and the well-known ability of our Staff to produce new busi- ness of the highest grade, encourages us to believe that no interests will be jeopardized and no dangers met with if we extend to Superintendents with debits, as well as to those without, the privilege of making advances, when necessary, to new Agents during those first weeks of their service when no special salary can be regularly received. * Advances are to be made only to new Agents, and only when in the judgment of the Superintendent they are necessary to secure the services of permanent and reliable men. A satisfactory amount of new business, known by the Superintendent to be of good quality, must be in hand before an advance is allowed. No advance is to be made after the time when special salary could have been received in the regular course. The Agent must, in every case, be made to understand that the advance is in the nature of a loan, to be repaid by him as soon as he makes regular earnings. It will be observed, on close examination of these extracts, that the Company's interests were well protected, while at the same time new agents, engaged at first in a rather difficult field, were encouraged by slight advances, sufficient to meet living expenses, until by their own efforts they had succeeded in estab- lishing a permanent and sufficient income. The careful attention given to every detail in the manage- ment of the field force of The Prudential is perhaps nowhere better set forth than in a letter from Vice-President Ward to a newly-appointed superintendent for his guidance in managing the affairs of his district. The letter was republished in The Pruden- tial Weekly Record of January 16, 1899, and the following extracts will illustrate the Company's interest in the economic and efficient administration of its district offices : On assuming the management of a District for this Company you should realize that the responsibilities of your position are of considerable mag- nitude. The Prudential desires to be known well in every community as fair- dealing and liberal in its treatment of policy-holders and others connected with it. Let it be your constant aim to do right and to see that those under you act with the same purpose all working to promote and advance the reputation of the Company and its employees. The opinion of the people THE PRUDENTIAL INS. CO. OF AMERICA, 1899. 271 who know The Prudential only by reputation will be influenced favorably or adversely according as the local office is managed. Your position as Superintendent entitles you, in a business way at least, to an acquaintance with the most influential residents, and you should deport yourself in a manner that will command the respect and confidence of the community at once and only employ those who will measure up to the same standard. Instruct your force never, under the penalty of immediate dismissal, to misrepresent a contract. Have the Company's rules strictly enforced. Examine the agents' collection books frequently, and see that policies are lapsed under the four weeks' rule. Retain every good or promising agent if possible ' ' finals ' ' mean lapses. Insist on Straight Canvassing. Encour- age each man to write Ordinary and to make the attempt to get Annual Premiums. Select for Agents men who are thoroughly respectable and possessed of the qualities which make for success honest, earnest, industrious and sober men. Get good material to work upon, and then spare no pains in the development. If you begin aright, the after- work is much easier. Do not let an Agent go for want of a little time and care. Remember it is a part of your duty to make Agents and Assistants successful. We shall personally watch your record with a great deal of interest, and give you all the time and opportunity we think necessary to insure your continuance as a Superintendent. The fact of our placing a District in your hands shows our confidence in your ability and integrity, and you have our best wishes for success. The truly national character of The Prudential was once more illustrated in the great fire which destroyed the Hotel Windsor in New York City on March 17, 1899. There were found, four days after the fire, wrapped up in an old shawl with a bank-book, two Prudential policies on the lives of persons living in the hotel. The incident is referred to in The Prudential Weekly Record of April loth, in which also a reproduction of the half -charred policies is given, together with the following com- ments : Investigation by Prudential representatives discovered, happily, that the two persons named were not among the lost, but are still alive ; also the following facts : Both women are married. Mrs. McDonald was in the employ of the hotel. Her sister, Mrs. White, is in Europe, and had left her policy in care of her sister. Together with Mrs. McDonald's effects, including her policy, her bank-book and $600 in cash, Mrs. White's policy was placed in her sis- ter's trunk. The latter was destroyed, also the money, all that remained being the bank-book, policies and the brass padlock of the trunk. Mrs. McDonald was on the fourth floor of the hotel when the fire broke out, but escaped. 2/2 HISTORY OF THE PRUDENTIAL. This connection of ours with an occurrence that has shocked and horri- fied the whole country again calls to mind the all-embracing and truly national character of The Prudential. No great fire, explosion, railroad accident or other mishap or disaster involving large loss of life can now occur in which this Company is not somehow concerned, and generally as a ready helper in time of sorest need. Another policy-holder of the Company living at the time in the hotel also fortunately made her escape without serious injury. Mention has been made, in an earlier part of this work, of the passage of a law in the State of Colorado in 1893, prohibiting the insurance of minors under the age of ten years. In com- pliance with a strong local demand for the repeal of this law, officially voiced by the Insurance Commissioner, a determined effort was made this year to repeal the law of 1893, an( l enact in its place a regulating statute practically identical with a similar law an force in the State of New York and the Province of Ontario. With this object in view, House Bill No. 317, a copy of which is given below, was introduced into the Colorado Legis- lature by Mr. Arthur Bartels, of Denver : BILL REGULATING THE INSURANCE OF MINORS. SECTION i. Any person liable for the support of a child of the age of one year and upward may take a yearly renewable term policy of insurance thereon, the amount payable under which may be made to increase with advancing age and which shall not exceed the sums specified in the follow- ing table, the ages therein specified being the age at time of death, and which, after the age of thirteen, may become an ordinary life policy for an amount not exceeding the sum specified in the table : Between the ages of one and two years, thirty dollars. Between the ages of two and three years, thirty-four dollars. Between the ages of three and four years, forty dollars. Between the ages of four and five years, forty-eight dollars. Between the ages of five and six years, fifty-eight dollars. Between the ages of six and seven years, one hundred and forty dollars. Between the ages of seven and eight years, one hundred and sixty- eight dollars. Between the ages of eight and nine years, two hundred dollars. Between the ages of nine and ten years, two hundred and forty dollars. Between the ages of ten and eleven years, three hundred dollars. Between the ages of eleven and twelve years, three hundred and eighty dollars. Between the ages of twelve and thirteen years, four hundred and sixty dollars. THE PRUDENTIAL INS. CO. OF AMERICA, 1899. 273 Between the ages of thirteen and sixteen years, five hundred and twenty dollars. Between the ages of sixteen and seventeen years, six hundred and twelve dollars. Between the ages of seventeen and eighteen years, seven hundred dollars. Between the ages of eighteen and nineteen years, seven hundred and eighty-four dollars. Between the ages of nineteen and twenty years, eight hundred and fifty -five dollars. Between the ages of twenty and twenty-one years, nine hundred and thirty dollars. SECTION 2. All acts and parts of acts in conflict herewith are hereby repealed. SECTION 3. In the opinion of the General Assembly an emergency exists ; therefore, this act shall take effect and be in force from and after its passage. It will be observed, on examination of this bill, that ade- quate provision was made against speculative insurance of any kind, either on the part of Industrial or Ordinary companies ; that the bill covered all ages under twenty-one, and permitted at the younger ages insurance for amounts just about sufficient to meet funeral expenses and the cost of the last illness. The bill had the approval of the Superintendent of Insurance, the Hon. H. H. Eddy, who had taken pains to secure information and data with reference to the transaction of this form of insurance in other States of the Union. A circular letter had been addressed by Mr. Kddy to the Insurance Commissioners of leading States, stating that I would esteem it a very great favor if you would kindly advise me as to the results of the prosecution of this kind of insurance [Industrial] in your State, and whether, in your judgment, the repeal of the present pro- hibitive law and the enactment of a permissive law, with proper restrictions placed upon and proper regulation of the insurance companies provided for, would be a benefit to the community at large, or otherwise. In reply to Mr. Kddy's letter, the Insurance Commissioner of New Jersey, the Hon. Wm. Bettle, said : As you are doubtless aware, industrial insurance, on the lives of both adults and infants, has been prosecuted in this State for many years, and has attained a volume as large perhaps, if not larger, in proportion to population, than any other State in the Union, and this Department has yet to receive the first charge or complaint that the insurance of children under ten years of age was productive of infanticide. I have long since 274 HISTORY OF THE PRUDENTIAL. rejected the assertion as entirely unfounded and unjustifiable. The benefi- cence and value of this kind of insurance have been demonstrated beyond question, and there can be no doubt that the repeal of the present statute of your State prohibiting the insurance of children under ten years of age, and the enactment of a law permitting this to be done, with proper restrictions upon and regulation of the companies transacting it, would be a great benefit to its people. The reply from the Insurance Superintendent of New York was as follows : The recognition given insurance of this character is contained in section 55 of our insurance law, chapter 690, laws of 1892. This Department has never had any cause to criticise the provisions of this section of the law. I note your statement that the principal argu- ment which has been used against the passage of such a law in your State is that it would be productive of infanticide for the purpose of obtaining the insurance. I am of the opinion that this is a very poor argument, and certainly the records of insurance corporations carrying on business of this character will not bear out any such statement. A likewise favorable reply was received from the Insurance Superintendent of Illinois : No evidence has been presented to this Department, and I am not aware that any exists, that this character of insurance has resulted in increasing, or has been productive of infanticide. I believe that the experience of the companies who do this kind of business has demonstrated that under proper restrictions it is a benefit both to the parents of children who are insured, who are usually in poor circumstances, and likewise and in consequence a benefit to the community at large. Since my incum- bency in the office of Superintendent of Insurance, no complaints have been made of the evil effects of this insurance, or of any wrongful practices peculiar to this character of insurance. From Ohio, where a vast amount of Industrial insurance has been transacted for many years, the official opinion on the part of the State Superintendent of Insurance was expressed in the following words : Industrial insurance has been written in Ohio for several j^ears, and so far we have never had any complaints from any sources showing that there has been any criminal or immoral effects arising from it. My opinion is that no such effects come from the business. From the State of Massachusetts, where a few years before a considerable agitation had resulted in an official investigation of THE PRUDENTIAL INS. CO. OF AMERICA, 1899. 2 75 the entire subject, the Deputy Insurance Commissioner replied as follows : The business has been almost wholly confined to the operations of the three large companies which have made a specialty of it, and the popular verdict upon its results has been one of full approval and commendation. The industrial companies have had to struggle against prejudice, igno- rance, jealousy and a thousand impediments that inevitably attend the promotion and building up of a new system, until its usefulness and value have asserted themselves and vindicated its adoption. Its progress has been steady and aggressive, until now probably not less than ten millions of lives are insured under it in this country, while in England probably one- half of the entire population are included in similar institutions there. Very many inquiries and investigations have from time to time been instituted, and very thorough and searching examinations have been had. The most important of these and of greatest length and breadth of inquiry were in the Commons House of Parliament of Great Britain, and by the General Court of Massachusetts in 1895. The verdict in both cases was a practically unanimous approval of the plans of the companies, the vote in the Massachusetts House being 149 to 23. The system of industrial insurance can be successfully carried on only in cities or thickly settled communities of mechanical or indus- trial operatives, where the collection of the small weekly premiums can be quickly and economically made. It -is, if not essentially, at least very largely, family insurance, and if the insurance of the children at the same time with the parents is not permitted a very great part of its attractive- ness and value would be lost. A similar reply was received from the State of Pennsylvania, where also more or less agitation had led to numerous attempts at adverse legislation : The claim that the insurance of children at an early age is productive of infanticide for the purpose of obtaining the insurance is entirely falla- cious, the amount of the policy in the case of a child under ten years being so small that 'the temptation to commit a crime of that sort is almost entirely eliminated. The Insurance Commissioner of Connecticut stated that / believe it is a benefit to any State, and I believe that the companies themselves are trying to prosecute the business to treat the policy-holders fairly, and to pay their claims promptly. This kind of insurance has been conducted across the water successfully, and it is now increasing rapidly in this country. / believe that every State ought to open its doors, with such restrictions as they, might deem best, to allow this business to be transacted. It is legitimate, it has done a great good to the community and has benefited and is benefiting thousands. 276 HISTORY OF THE PRUDENTIAL. Summing up the results of his investigation, Mr. Eddy ex- pressed himself forcibly on the subject as follows : As to the Insurance Department of Colorado, I may say that it has again and again recommended the repeal of the law of 1893, which abso- lutely prohibits the insurance of minors under ten years of age, and favored the enactment, in lieu thereof, of a regulating statute, similar to that which obtains in other States of the Union, being an exact copy as to detail of the statute now in force in the State of New York and the Province of Ontario. The department is in possession 6f no facts, nor have any come to my personal knowledge, tending to show that the insurance of minors is not in every sense as legitimate, as beneficial or as necessary as the insurance of adults. It will be observed, on careful reading of the preceding extracts, that without exception the Insurance Commissioners of the principal States of the Union in which Industrial insurance had been conducted for many years were strongly in favor of the insurance of children for small amounts, and this view, as has been pointed out, was based on careful personal investigation and the records of the departments officially in charge of the insur- ance interests of the different States. The passage of the bill was from the outset bitterly opposed by a few members, including the Secretary of the Colorado Humane Society, the same body which in 1893 had succeeded in placing the prohibitive law on the statute-book. A strong effort was made by the Society to create a sentiment adverse to the passage of the law, especially among kindred societies. The subject being practically unknown to a large number of people outside of the industrial population, it became necessary to disseminate information pertaining to the subject of Industrial insurance, but within a short time after the opposition manifested itself some of the leading and most respected citizens of the State came forward with emphatic statements of their views in favor of the passage of the bill and the repeal of the law of 1893. Among others, Mrs. Sarah S. Platt, President of the State Board of Charities and President of the Women's Club of the State of Colorado, in an open letter under date of February 20, 1899, expressed herself as follows : In my charity work in Holyoke, Mass., where the majority of the peo- ple are factory workers and where large numbers are insured on this plan, I had often occasion to meet with the good results of this form of saving. I met with abundant proof that by this method of insurance much misery was THE PRUDENTIAL INS. CO. OF AMERICA, 1899. 277 directly prevented in that the people were placed above the need of public support to bury their dead ; but furthermore, in that much good was done in an indirect manner by teaching the working people systematic habits of saving in other directions. Although I have seen much of the actual work- ings of this method of family insurance, I have never met with an instance where harm was likely to result, and for these reasons, and as the result of my personal knowledge, I agree that the prohibitory law of 1893 should be repealed and be replaced by a regulating statute such as is in force in other States. The Rev. Edward Pearsons Newton, President of the Asso- ciated Charities of Pueblo, Colo., also dealt with the subject in an open letter dated February i6th : For years my interests have led me to read much upon social and charitable lines. I believe Industrial Insurance makes for thrift and inde- pendence, and these are above all things to be fostered among the poor. I heartily desire its introduction among the wage-earners of Pueblo, of whom we have so many. Among others, the Rev. Thos. H. Malone, Editor of the Colorado Catholic, a member of the State Board of Charities, and one of the foremost of the Catholic clergy of the State, not only expressed his views in an open letter dated Feb- ruary 25th, but also appeared personally before the Senate In- surance Committee in favor of the repeal of the law of 1893. From his letter I quote the following extract : I have given the matter some thought and consideration with special view of the moral aspects of the whole question, and in the absence of any facts detrimental to this method of insurance, and in the further absence of any reasonable theory of public morals as opposed to it, I am in favor of the repeal of the law of 1893 and the enactment of a regulating statute, which will not only correct a former injustice, but do much to place the business as a whole on a better legal foundation, since I understand that the law itself has been declared unconstitutional. As one having some knowl- edge of the life and labor of the working people of this State, I do not hesitate to say that I feel satisfied that they can be trusted in this matter, and that they should not be deprived of the liberty to place a small insur- ance protection on the lives of every member of the family as may to them seem expedient and desirable. These views of recognized authorities on matters relating to public welfare, with special reference to the administration of public charities, are supplemented by a letter addressed to State Senator J. C. Evans, in reply to a letter of inquiry as to the 278 HISTORY OF THE PRUDENTIAL. insurance of minors in the city of Boston. During the agita- tion of 1895 in the State of Massachusetts, when an attempt was made to prohibit the insurance of children under ten years of age, Mr. Thos. T. Stokes, Director of the Associated Charities of Boston, had appeared before the committee of the Legislature and had expressed himself strongly in favor of the insurance of children. Senator Kvans addressed a letter to Mr. Stokes, mak- ing inquiry as to whether subsequent experience had been such as to induce him to change his views in regard to the subject. In reply Mr. Stokes expressed himself as follows : I beg to say that my ideas are the same as when I was quoted before a committee of our " General Court." I believe there may be abuses, but to prevent thousands saving because a few may spend their money foolishly is no argument. Then again, I believe in thrift and to try and encourage people to save. I firmly believe that in Massachusetts there has never been a case where a child has been murdered by neglect, or quicker means, for the insurance. I am not a teetotaler, but when money goes any way out of the saloon it's for the better interests of the public. It's said undertakers are most interested in keeping alive child insurance ; well, the poor have feelings as the rich and love their children, why should they not take pride in having a respectable funeral ? And it's better to be prepared than when the time comes to be burdened by a load of debt. The good people who were, and are, against this class of insurance offer no suggestions, and are the first to cry out about " the improvidence of the poor." I had charge as president of wards 13, 14 and 15 seventy-five thousand people for years. I have seen people have but little money by them, but do their best to keep up the payments ; ifs a wonderful object lesson, and those who from their fine residences offer suggestions and nothing else are not fit judges. A large body of evidence was presented from all parts of the country tending to show that charges made against the system were unfounded, and based on prejudice, ignorance or personal spite, and these views gradually prevailed with the outside public, as well as with the members of the Legislature. A large number of petitions were received from the three principal cities of the State, aggregating thousands of names of men and women voters of the State, asking the Legislature to repeal the law of 1893 and enact the regulating statute outlined and denned in House Bill No. 317. As illustrating the widespread extent of the agitation in favor of the passage of the law, I cannot do better than quote from some letters from citizens of Denver, making clear the views of working men and working women, aiming in THE PRUDENTIAL INS. CO. OF AMERICA, 1899. 279 their own way, and within the limit of their own means, to improve the conditions of their struggle for a higher and a better social life and provide, as far as possible, against the hardships and contingencies of human life. The following extract is from a letter from Mrs. Annie B. Bradley, of No. 402 South Broadway, Denver, Colo., dated March 10, 1899 : I cannot better express my convictions on the subject than by stat- ing that the lives of my two children, as well as of every other member of my family, have been insured for the past seven years, and I feel quite sure that those who know me will not think that I placed this small amount of insurance provision on the lives of my children out of any mercenary motive or for any purpose of gain. I believe in insurance for children as much as I believe in insurance for adults, seeing in this method of saving the best means of making provision for possible emergencies. I find it difficult to express my feelings as to those who have, in the most malignant and uncalled-for manner, insulted those who have thus given practical proof of their belief in the merits of Industrial insurance. To my mind, the so-called humane societies who are opposed to House Bill 317 are absolutely ignorant of that portion of our population who avail them- selves of this method of saving and insurance. I am, perhaps, as familiar with the life of the wage-earners of this city as any one, and to my mind only those who have forethought and thrift make use of this method of family insurance. From all that I can learn, those opposed to the bill regulating the insur- ance of minors and repealing the law of 1893 have not brought forward a single fact in support of their slanderous and libelous allegations. In jus- tice to the thousands of self-respecting and upright people of this city who believe in Industrial insurance, I protest against the mischievous, mislead- ing and insulting method pursued by the Secretary of the Humane Society. The man does not speak for the wage-earners of this city, but rather mis- represents the best interests of the working people of this State. I feel quite sure that we are more competent to judge of the merits of Industrial insurance than these self-appointed social reformers, who have never been asked by any workingman y woman or child to represent their side of this question. A still more emphatic expression of the workingmen's view of the case is found in the following letter from Mr. Jacob Hauck, a shoemaker of No. 2044 Humboldt street, Denver, Colo. : I have heard a good many arguments in regard to this bill. I for one believe in Industrial insurance and always advocate it, and I know what I am talking about, having lost two members in my family who carried that kind of insurance, and it was a great help in need. It is a grand institution for the poor. If a man has a large family like myself and has to work for a living, it is almost impossible for him to lay away money ; he needs it all 280 HISTORY OF THE PRUDENTIAL. for the support of his family. But I could always pay five or ten cents a week to some Industrial company and never miss it, and when death comes you don't have to ask cold charity for help. When I lived in the East I had all my children insured, and, thank God, none of them died. Here in this city I lost a child which never was insured, and do you know where that poor thing is buried ? Away out in the prairie is a place called Potter's Field, and there, among unknown men and women, lies that child of mine. It makes my heart ache when I go out there and look at the place where my child is buried. I take it as a personal insult when I hear people say that the poor would kill their little 'ones for a few pieces of silver. No ; they insure them because they love them, and when they die they can be laid away decently. I look on this kind of insurance as a savings bank for the poor. I have carried this kind of insurance in my family for the last fourteen years, and never saw anything in any way where the company tried to make you give up your insurance so they could profit by lapses. On the contrary, if one mentions one word to the agent as to lapsing a policy he does all in his power to prevent it and to induce one to keep it up. If he does not succeed he will call in his assistant superintendent, and if he can not make one keep up the policy, the next one to call is the superintendent of the district, and they will all tell the same story, " Keep it up don't drop it don't give up your insurance." Another lengthy letter addressed to Mr. Bartels, the cham- pion of the people, was from a Mrs. L. F. Alexander, of No. 1462 South Tremont street, Denver, Colo. This letter also illustrates the strong views held by working people of the State on the subject of prohibitive legislation, and I may be permitted to make a brief extract which is deserving of a permanent place in this summary of public opinion on the subject of Industrial insurance : Industrial insurance, to my mind, is a Godsend to the class of people who, by paying a small sum weekly, provide themselves with the means to give their little ones a decent burial without the assistance of the county. The idea has been advanced [by the Humane Society] that child insurance causes parents to murder or neglect their children, whereby they would receive the pitiable sum which in some cases would not defray the expenses of burial. Such an argument, to my mind, is simply absurd. In the same argument the suggestion was made [by the Humane Society] that the county could bury the children of the poor. Another absurd idea ! Why should pov- erty restrict the affection and respect of parents for their children ? In the same argument it was said that children would be deprived of the necessities of life by their parents pay ing from five to ten cents a week on the Industrial policy. True, Death does not visit every home of the poor, but in case it should, how much more difficult for the parents whose children are not insured to defray funeral expenses, which must be paid, than to pay the paltry sum of five or ten cents a week for the insurance ? Having laid away THE PRUDENTIAL INS. CO. OF AMERICA, 1899. two little ones under very trying circumstances, who were not insured, I know whereof I speak. I fail to see wherein the Humane Society is doing an act of humanity by opposing the insurance of children. The result of this agitation, extending, as it did, over a con- siderable period of time, is best summed up in the following extract from the Weekly Underwriter of April 15, 1899 : A feature of the legislative period was the strong fight made to secure the repeal of the present prohibitive law relating to child insurance and to secure the passage of an act permitting the insurance of minors under the age of ten years, under proper restrictions and safeguards. At the outset the Humane Society and the newspapers vigorously opposed the proposed change. The industrial company waged a campaign of education, printing and distributing a number of telling circulars. In spite of prejudice arising through ignorance, misinformation and malice, the bill passed the House,* and a strong majority for it was found in the Senate ; but as it arrived in the Senate late in the session, a determined effort to filibuster indicated by two senators compelled the majority to surrender the bill in order to pass other measures in the limited time left at their disposal. Had the bill reached the Senate a few days earlier, it would undoubtedly have passed. f Although but little more than seven years had passed since the new office building of the Company had been occupied for business purposes, it had gradually become evident that the rapid increase in business would require a very considerable addition to the Company's office accommodations. While at first a large part of the building had been leased for general office * In Colorado women have a right to vote and hold office. It is there- fore of interest to note that of the three women members of the House of Representatives, Dr. Mary F. Barry, of Pueblo, and Mrs. Harriet G. R. Wright, of Denver, voted in favor of the repeal of the prohibitive statute of 1893. f In Ohio an attempt was made in the early part of 1900 to pass a bill pro- hibiting the insurance of children under the age of twelve. In few sections of the country is Industrial insurance so thoroughly understood as in Ohio, where, on account of the large urban population, a very considerable pro- portion of the people are insured on the Industrial plan of family insurance. The bill was very carefully considered by the Senate, hearings were granted to the companies opposed to the measure and to the Ohio Humane Society, in favor of the bill. Every phase of the business received exceptionally careful consideration on the part of practically every member of the Senate. In view of these facts it is of more than passing interest to note that the bill attempting to prohibit the insurance of minors, under the age of twelve, in the State of Ohio, was defeated by a vote of 24 against the measure and only one vote (the author of the bill) in its favor. 282 HISTORY OF THE PRUDENTIAL. purposes, gradually, as these leases had terminated, the space had been occupied by the Company for its own purposes. Anticipating the necessity of new buildings, additional real estate had been purchased, and during September, 1899, ground was broken for the erection of three new structures adjoining the present home-office building. When completed the home office of The Prudential will be unsurpassed by any similar building in the world as a structure devoted almost entirely to the transaction of a life-insurance business. Before I review the year's results in more detail, it is but proper that mention should be made of an event of exceptional importance in the history of the Company. I have on previous occasions referred to the loyalty of the agency force and the Company's high appreciation of the continued service of its men. Among those who entered the Company's employ at a critical period of its existence, at a time when the business was in its very infancy, and when exceptional courage and extraordinary effort were required to make the business a success, was Superin- tendent Peter Egenolf, who had entered the Company's field force as an agent on the loth of November, 1879, or exactly four years after the first application for Industrial insurance had been received by the then Prudential Friendly Society. Mr. Egenolf celebrated the twentieth anniversary of his connection with the Company by a banquet tendered by him to the officers of the Company and the employees of his own office at the Hotel Savoy on November 10, 1899. At the dinner, Mr. Dryden, as Presi- dent of The Prudential, paid Mr. Egenolf a high tribute as a worker in the service of the Company, as one who had borne himself with rare skill, energy and fidelity all through his long service. He gave some interesting reminiscences of Mr. Egenolf 's early connection with the Company, and concluded by presenting him with a certificate of membership in The Prudential Old Guard, Class D, likewise with the diamond badge which distin- guishes the members of the Old Guard who have been twenty years in the Company's employ. The Vice- President of the Com- pany, Dr. Leslie D. Ward, also dwelt in his remarks upon the splendid qualities of Mr. Egenolf, referring to him as one of the men who had so ably helped to build up The Prudential, and concluding with the statement that ' ' No man in its field service is more highly esteemed than Mr. Egenolf. ' ' THE PRUDENTIAL INS. CO. OF AMERICA, 1899. Another veteran Superintendent, Mr. C. V. Dykeman, of the L,ong Island City District, celebrated the completion of his twen- tieth year of service with the Company by giving a banquet at Delmonico's to his brother Superintendents of the Long Island District and some representatives of the home office. Mr. Dyke- man shared equally with Mr. Egenolf the honor of having been one of 'the Company's most loyal and faithful Superintendents during a period when such services were needed most. Mention must also be made of Mr. L. W. Frisbee and Mr. K. G. Jackson, two veteran Superintendents, who have almost completed their twenty years of service with the Company. The Prudential is un- der permanent obligations to these two men for services of the highest order and the performance of duty under most trying con- ditions during the early years of the Company's history. There are also many Agents and clerks whose services extend over two decades, and who have in no small manner contributed to the won- derful success of the Company, but want of space forbids more than incidental mention of this fact. It is not too much to say that in few institutions, in few business organizations, exist such happy and cordial relations as are found among the officers of The Prudential Insurance Company and its employees.* At the close of the year the total number of Industrial policies in force had reached 3,406,189, insuring the sum of $389,139,257, indicating again over the preceding year of 481,663 Industrial policies and of $55, 147,057 of Industrial insurance. In combining Industrial and Ordinary business, The Prudential had in force at the close of 1899 3,509,417 policies, and insurance amounting to more than one-half billion of dollars, the exact figures being $502 , 30 1 , 486. Of all the insurance companies in the United States, only four have insurance in force exceeding this sum, and the youngest of these companies is many years older than The Prudential. * Another Superintendent, Mr. W. F. L,awson, of Philadelphia, cele- brated the anniversary of his twentieth year of continued connection with The Prudential on January 30, 1900. Mr. Dryden, who was present at the banquet, referred to Mr. Lawson as one of the men through whose efforts The Prudential had reached the commanding position of being the leading insurance company in the State of Pennsylvania. Mr. L,awson represents one of the highest types of an Industrial underwriter, and is looked upon as a model by all who have had the privilege of personal relations with him during his long and exceptionally successful career. 284 HISTORY OF THE PRUDENTIAL, CHAPTER XVI. SUMMARY OF CONCLUSIONS AND RESULTS. Of life insurance for workingmen it has been said, with much truth, that "it is not an end in itself, but a means to an end," that it is " primarily a savings institution by which men are assisted to make provision for future contingencies,"* and with equal truth, by another authority on social economics, that 1 ' It is evident that insurance of various kinds is an indispensa- ble condition of that economic security for the laboring classes which is so desirable for their happiness and for the welfare of society, and which must form part of the solution of the labor problem. " f It is my firm conviction that in the vast improve- ment of the material and moral condition of our working people, which undoubtedly has taken place during the past quarter- century, Industrial insurance has done much to help bring about this much-to-be-desired result, and that it has had its share in the gradual solution of the so-called labor question by increasing the degree of economic security and social welfare, the evidences of which we meet with in all directions. But whatever the final verdict of the economist and student of social progress, one fact stands out broadly which must needs attract atten- tion, and which can neither be ignored nor explained away, the fact that, of all forms of social institutions making for the improvement of the condition of the masses by the application of sound principles of insurance and finance, Industrial insur- ance holds to-day the most commanding position, counting its patrons by more than thirty millions the world over, while in the United States, during the short space of a quarter of a century, its operations have reached an extent unknown in the earlier history of American life insurance. * W. F. Willoughby, Workingmen's Insurance, pp. 2-3. Crowell & Co., New York, 1898. | Richard T. Ely, The Labor Problem in America, p. 141. SUMMARY OF CONCLUSIONS AND RESULTS. 285 By the ist of January, 1900, the eleven principal Industrial companies for which the information has been published returned 10,026,442 Industrial policies as in force on December 31, 1899, for the sum of more than one billion of dollars, or, to be accurate, $1,290,436,355. The table which follows will give the details for each of the eleven companies, together with the location of the principal offices, indicating the vast numerical and territorial extent of the business : INDUSTRIAL INSURANCE IN THE UNITED STATES. JANUARY i, 1900. COMPANIES. lyOCATION OF HOME OFFICB. No. OF POLI- CIES IN FORCE. AMTS. OF IND. INS. IN FORCB. Metropolitan, .... Prudential . . New York, N. Y. Newark N J 4,855,756 a Ao6 1 80 $688,629,175 380 O^Q 2^7 John Hancock, .... Life Ins. Co. of Va., . Sun Boston, Mass. Richmond, Va. Louisville Ky. 1, 069, [97 219,679 14.8 O4Q 141,609,904 20,246,656 16 368 863 Western & Southern, . Baltimore Mutual Aid, Pacific Mutual, .... Colonial Cincinnati, O. Baltimore, Md. San Francisco, Cal. Tersev Citv N T 117,545 86,251 61,709 07 6o7 10,881,961 5I50,963 11,779,229 2 S^d. O7^ Mutual . . . Baltimore Md 21 132 2 3OA 762 Provident Life, .... Wheeling, W. Va. 13,238 1,571,510 10,026,442 $1,200, 4^6.^5 If we briefly compare the numerical aspect of the results attained by Industrial insurance companies, with the results at- tained by Ordinary life companies and savings banks, we have proof in the following table that the most recent form of life insurance and savings has made progress far exceeding the prog- ress of other forms of insurance and thrift in this country : COMPARATIVE RESULTS OF INSURANCE AND SAVINGS INSTITUTIONS IN THE UNITED STATES. 1899. NOMBER OF INSTITUTIONS. NUMBER. ii Industrial Life Companies,* Policy-holders, . . .10,026,442 942 Savings Banks, Depositors, 5,687,818 58 Ordinary Life Companies, Policy-holders, . . . 2,807,476 * Six of these companies transact also an Ordinary business. The num- ber of Ordinary policies in force with these companies on December 31, 1899, was 268,153, for $300,175,426 of life-insurance protection. The average amount per policy, only $i, 120, will illustrate the Industrial character of the average Ordinary risk in the Industrial companies. 286 HISTORY OF THE PRUDENTIAL. This result is without a parallel in economic or social history. It would have been impossible but for the all-important fact, which I feel .satisfied has been brought out clearly, that Industrial insurance, as illustrated in the history of The Prudential Insurance Company of America, is, like society itself, ' ' not a manufacture, but a growth," a growth, I may add, fully in harmony with the healthy and normal progress of the working people of this country during the past quarter-century. If, in the words of Mr. Devine, it is a "mental trait of the economic man," to readily ''accept the final judgment of the community as to the market value of the commodities and services he wishes to buy or sell,"* we must concede that Industrial insurance must meet not only inherent and definite needs not supplied by other agencies or forms of thrift, but that these wants and needs are supplied to the satisfaction of the millions who, in ever-increasing numbers, are becoming patrons of the Industrial companies. We must also accept the further conclusion that the progress of Industrial insurance is evidence of a healthy economic and social instinct, and that the requirements of society are fully met in the immediate and remote results which have been accom- plished. I fully agree with Mr. Devine, that " It is a mistake, though not an uncommon one, to credit the economic instinct with the disposition to place material satisfactions above those which spring from man's higher nature, ' ' for ' ' the true economic instinct guards against just that tendency. It fixes the eye upon the future and highest want, rather than upon the lower and im- mediate want,"f and in the light of this reasoning, indicative of a thorough knowledge of the life and struggle of the industrial masses, I believe that we may, with perfect justice, concede to the policy-holders of Industrial companies the credit of having aimed high in their efforts to improve the condition of their daily strug- gle against poverty and want, by providing to the extent of their ability against the uncertainties of human life itself . The more Industrial insurance is studied, the more, I believe, will others share with me the conviction that it forms one of the most useful of modern institutions making for the improvement of social life * Economics, p. 13. The Macmillan Co., N. Y., 1898. t Ibid., p. 51. SUMMARY OF CONCLUSIONS AND RESULTS. 287 and the increase of economic security. It has properly been called ' ' family insurance, ' ' and such it truly is in the complete sense of the word, including in its beneficence a provision for certain recognized wants and needs of the entire family, while at the same time a more or less sufficient provision is made for the immediate needs of the widow and orphan as the first duty of self-reliant workingmen. If it is true, in the words of Mr. Lecky, that "improved conduct and improved circumstances are to an English mind the chief and almost the only measure of progress," I, for one, cannot escape the conclusion that, from considerations of the highest degree of public welfare, this system of life insurance is worthy of the careful study and sympathetic consideration of all who have the best interests of the working classes at heart. Want of space does not permit of a more extended consider- ation of the general social and economic aspects of Industrial life insurance as a modern form of thrift, the result of ages of gradual change and development of the most ancient forms of human association, but I trust that I have succeeded in making it plain to the reader that we have in Industrial insurance a form of thrift which no economist or student of social problems can properly and wisely ignore, a form of thrift which, rather than deserving of that marked degree of indifference which alone explains the paucity of all reference to the entire subject of life insurance in works on economics and social science, is fully worthy of the most careful and thorough study on the part of those who concern themselves with socio-economic questions di- rectly affecting the welfare of the working people of this country. As far as it has been possible, I have tried to give full consider- ation to all essential phases and aspects of more than passing interest to the reader and student of insurance progress. I have traced from the earliest beginning the development of the first Company organized in the TJnited States for the successful trans- action of this form of insurance, and the development of its methods and practice in conducting the business. It only re- mains for me to treat of the general results as they are restated in the statistical evidence of the quarter-century progress of The Prudential, and such related evidence as will further illustrate the importance of this form of life insurance for working people from the standpoint of public policy. 288 HISTORY OF THE PRUDENTIAL. The first table to which I would direct attention will show in a condensed form, yet with sufficient detail, the uninterrupted business progress of The Prudential during the entire period of its history. The returns as to policies in force and the amounts of insurance are given separately for both departments of the Company's business, for the Industrial for 1876-1899, and for the Ordinary for 1886-1899 : THK PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1876-1899. OUTSTANDING INSURANCE. YEARS ENDING INDUSTRIA L INSURANCE. ORDINAR v INSURANCE. DEC. 3iST No. AMOUNT. No. AMOUNT. 1876, 4,816 $443,072 1877, 1878, 1879, 1880, l88l ... 11,226 22,808 43,715 87,462 J77 C82 1,030,655 2,027,888 3,866,913 7,347,892 IO Q5Q Q48 1882, 1883, 196,007 277 QI7 15,738,973 27, O^T,, 075 1884, . . 1885, 324>794 422 671 28,545,189 40, 266,44^ 1886, 1887, . . . 548,433 7^6,000 59,328,627 81,694,088 427 735 $585,500 045,000 1888 gCQ O6/1 02 418 854 QI5 I 242 Q2Q l88q I OQQ 312 117 357 415 I 83Q 2 328 862 1800 . I 228 332 135 084 4Q8 3 272 4.O7Q 156 1801. I 360 383 I5O 758 QO7 5 677 6,8oi,435 1802. . i 653 4.6=; 184,306 2O6 8,120 9,5^1,076 1893, 1804. , 1,941,533 2,256,014 218,199,566 25Q,84O,O27 10,472 17,752 12,441,733 20,504,727 1895, .... 1896 2,330,741 2 477 25 I 268,414,100 27Q O3O 638 30,893 35 8O7 34,716,055 41,422 84^ 1807 2 658 7OO 3O3 77O 052 52,583 5Q, 346, 6^8 1898, 2,024,526 333,q02,2OO 71,927 80,554,853 1899, 3,406,189 389,039,257 103,228 113,162,229 According to this table the total number of Industrial policies now in force is 3,406,189, or more than half a million in excess of the total number of Ordinary policies in force with fifty-eight American life companies in 1899. The Ordinary policies of the Company number 103,228, placing The Prudential, after but fourteen years of Ordinary business operations, in the front rank with the giant life companies of the present day. I add, as a SUMMARY OF CONCLUSIONS AND RESULTS. 289 further indication of progress, a table showing for each year of business operations the annual average amount of insurance in force per policy for both the Industrial and Ordinary business of the Company : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1876-1899. YEARS ENDING DEC. 3isx. AVERAGE INDUSTRIAL POLICY. AVERAGE ORDINARY POLICY. 1876 . fo2 oo 1877. qi 8l 1878 ... 88 91 1870 88 46 !88o 84. 01 1881 . 82 os 1882 U^ WJ 80 10 188* 84 16 1884 87 8q i88s, qS 27 1886, 108 18 $1,371 IQ 1887, no 86 ,285 71 1888 1 08 72 ,3S& 3Q 1889 . 106 76 ,266 37 *<-"->:?> 1890, i8qr. 109 97 no 82 ' ;: ?' ,246 69 ,iq8 os 1892, III 47 ,173 78 i8q3, 112 ^q ,188 10 1894, US l8 ,ISS 07 i8qs, ... n5 16 ,123 75 1896, 114 49 ,156 84 1807 . 114 26 ,128 63 1808 114 20 I Iiq qs l8qq, . 114 22 I,oq6 24 It will be observed that the average amount per policy in force has been subject to more or less fluctuation as regards the Industrial business, but, nevertheless, a distinct tendency is apparent towards a higher average, while the contrary is to be observed in the Ordinary business. As regards the Industrial business, this increase in average amounts is due partly to increased benefits at the earlier ages, and partly to the additional benefits payable on policies subject to the many voluntary con- cessions, but largely in consequence of an increasing demand for policies for larger amounts as a means of providing not only for the burial expenses, but, in addition, for at least a small fund for the support of surviving members of the family. Cases are becoming more and more numerous where it can be said that 290 HISTORY OK THE PRUDENTIAL. Industrial insurance has provided for widows and orphans in addition to its primary purpose of meeting the expenses of burial and last illness. One such case I may mention as having been referred to in the Sixteenth Annual Report of the Boston Asso- ciated Charities (1895, p. 54), where I find it stated that ' ' After the death of the man the insurance money was enough to pay a few debts and leave enough for the wife to use until some course of action could be decided upon. The family is now quite comfortable. "* Such illustrations of the value of Industrial insur- ance in individual instances could be furnished by the thousands from the records of the companies, but want of space forbids more than incidental mention. Still it is true, as it has well been said, that ' ' The final value of all scientific work lies in the principles evolved from individual instances," and hence the value of cases like the one quoted. The decrease \vhich has taken place in the average amount of Ordinary policies must also be accepted as proof of the asser- tion that Industrial companies, in developing their Ordinary- business, have done so in a different direction than that fol- lowed by other Ordinary companies, in that they have extended the benefits of life insurance, after a vast amount of insurance education, to a class of people who have not been reached by the non-Industrial level-premium companies. The vital difference between the Ordinary business transacted by Indus- trial companies and the business of other Ordinary companies is illustrated by the fact that, while the average amount of an Ordinary policy in The Prudential in 1899 was $1,094, tne average amount for all Ordinary companies reporting to the New York Insurance Department in 1898 was $2,382, a very material difference, indicating that the Industrial companies extend the benefits of Ordinary life insurance to a class of people not reached by the other Ordinary life companies. * I find mention of a somewhat similar case in the Fortieth Annual Report of the Chicago Relief and Aid Society, where it is stated that "No. 43,660 is the case of a German with a wife and two boys, eleven and eight years old. He bore an exceptionally high character, and had never needed or asked aid till after a six months' illness of cancer of the stomach, of which he died a month later. The widow received $500 insur- ance, and after paying the funeral expenses and other debts incurred depos- ited the remaining three hundred in Dreyer's Bank, which failed." SUMMARY OF CONCLUSIONS AND RESULTS. 291 While at first The Prudential confined its operations exclu- sively to the transaction of an Industrial business and only com- menced the Ordinary business in 1886, it will be observed, on comparing the number of Industrial and Ordinary policy-holders, that at present the Ordinary business forms 2.9 per cent, of the total number of policies in force, while in amount the Ordinary forms 22.5 per cent, of the entire business of the Company. Since the ratio of Ordinary to total business has been gradually, though very slowly, on the increase, it may be assumed that this growth of the Ordinary department will continue and in time assume propor- tions equally extensive with the Industrial part of the business. The aggregate premium income of the Company, from both the Industrial and Ordinary business, during the past twenty- four years of business operations, is set forth in the following table : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1876-1899. PREMIUM INCOME. YKARS ENDING DEC. 3iST. INDUSTRIAL. ORDINARY. TOTAL. 1876 . $14 4Q"^ jJJlA AQS 1877. . 28 517 p^j^yo 08 e;i7 1878, en 8l7 CQ 8l7 l87O T2I ^60 oy> OA / l88o . oco Q^8 1881, 1882 402,947 C7I 5QC ^o u 'yo 402,947 r<7j CQC 1883 . 828 9TI o/^oyo 828 911 1884, I 127 738 I 127 738 i88s, . 1,468 Q^6 i d.68 Q"s6 1886 2 OQQ ^23 1887 . 2 008 ^ ^ ^ $> i '*i//6 1888 3 616 168 oo >/*** A3 327 - s >y4^)-'o/ 36 u oy>4yo 4AAO 833 1800 . c TI-J 808 122 Q78 c 636 876 l8qi, . 6 217 72Q JQC CC4 6 413 283 1892 7 214 ^61 3TT 282 1803 8 679 468 AQX 176 O Z O)44 o o8j RAA 1804 . IO 2Q5 877 4*-o>o/ u CQ4 42 6C iScK . IO QOI 674 QQI OQ3 II 892 767 1806 . II QQI 713 yy l >^y6 I 337 Q3I 13 32Q 6>AA iU^VJ, 1807, . 12 762 CKI I 788 QI7 I A CCT 868 1898, 13,642,10! 2 4Q7 261 l6 I3Q 4^2 1800 j c 411 2^4 36l7 ^"z8 > U1 /)OO Total, . . . $120,505,542 $12,022,505 $132,528,047 HISTORY OF THE PRUDENTIAL. It is shown by this table that while the annual premium income now exceeds nineteen million dollars, the aggregate during the past twenty-four years has been $132,528,047. The table is properly supplemented by one showing the aggregate income of the Company from all sources, including the income from interests, rents, etc. , which now annually exceeds one and a half million dollars: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1876-1899. TOTAL INCOME. YEARS ENDING DEC. SIST. FROM POLICY HOLDERS. FROM OTHER SOURCES. TOTAL. 1876, $14,495 $48 $14,543. l8?7 28 517 IIQ 28 636 1878 CQ 8l7 66^ 60 480 1870 121 ^60 7067 128 627 1880 25O Q^8 2O 064 27T Q22 1881 . ... 4O2 Q47 Q 7l8 412 66 s . 1882, 571, 5Q5 I2,9Q8 584,50,3. 1883. 828 911 16,992 845 QO3 !884 I 127 73,8 28,842 i 156 580 i88s I 4.68 056 4O.7O7 I 5OQ 66^ 1886, 1887 2,114,296 2QJ.2 2^7 50,66l 71 OQ4 2,164,957 7 oi 3 3^1 1888, 1889 1800, 3. 6 59.495 4,442,833 5,63,6,876 97,589 158,465 184,777 3,757,084 4,601,298 5,821,653, l8qi 6,413,283, 290,^49 6,703,632 1802, 7,525,844 363,034 7,888,878 1893 1894, 9,084,844 10,890,302 437,068 567,032 9,521,912 11,457,334 1895, 11,892,767 692,771 12,585,538 1896 13,329,644 828,802 14,158,446 1807 14 551 868 i 028 807 1C ego 76* 1898, 16,139,452 1,342,424 17,481,876 1899, 19,028,792 1,557,408 20,586,200 Total, $13,2,528,047 $7, 808, 480 $140,33,6,536 The total income from other sources than premiums during the twenty-four years of business operations has been, as shown, $7,808,489, which, added to the preceding total of $132,528,047, makes a grand total income from all sources, during the period 1876-1899, of $140,336,536. All this has been achieved by a SUMMARY OF CONCLUSIONS AND RESULTS. 293 Company transacting a form of life insurance practically unknown in this country twenty-five years ago. But a still more stupendous result is disclosed in the aggregate of business transactions in the field operations of The Prudential, as indicated by the statement of new insurance written during each of the years forming the period 1876-1899 : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1876-1899. NEW INSURANCE ISSUED. YEARS ENDING DEC. 3iST. INDUSTRIAL. ORDINARY. No. AMOUNT. No. AMOUNT. I8 7 6, 1877, I8 7 8, 1879, 1880, 1881, 1882, 1883, 7,904 10,521 20,064 35.879 101,856 124,746 151,956 227,417 266,718 304,773 391,278 519,577 558,339 721,830 808,597 623,804 804,075 ,086,780 ,696,847 ,044,686 957,804 ,008,868 ,043,998 ,401,399 $727,168 967,932 1,785,696 3,157,352 8,555,904 9,688,362 11,541,210 20,426,140 24,892,268 28,860,882 49,142,316 60,202,194 58,214,981 73,576,853 95,674,484 72,966,176 92,677,524 128,208,941 205,128,243 124,374,407 108,223,712 112,371,379 121,080,784 165,760,248 552 574 458 1,280 2,484 3,827 4,503 5,280 12,245 23,503 17,695 29,002 39,208 54,342 $728,500 689,000 632,413 1,568,542 3,075,376 4,449, I 77 5,080,097 6,256,198 13,872,559 25,706,280 21,190,031 3i,58i,798 43,614,000 56,914,383 1884, 1885, 1886, 1887, 1888, . . . .. 1889, .... 1800 1891, 1892, 1801 1894, 1895, 1896, 180? 1898, .... 1800 Total, . . I3,9?97i6 $1,578,205,156 194,953 $215,358,354 It is apparent from a study of this table that the annual volume of new business has been subject to very considerable fluctuations, but much more so in the Industrial than in the Ordinary business of the Company. In the former, the largest volume of business was written during 1894, next to which comes 294 HISTORY OF THE PRUDENTIAL. the record for the year just closed, while in Ordinary business the largest volume of new applications was secured during 1899. The aggregate result of a quarter-century of effort to ' ' extend the principles of life insurance to the masses ' ' is summed up in the total of 13,919,716 Industrial and 194,953 Ordinary policies written and revived during the period. If from this total we deduct the number of policy-holders whose deaths are represented in the return of claims paid, we have still a vastly larger number than are now in force on the books of the Company. The difference between the business written and the business at present in force, minus the mortality during the period, represents the lapses, the terminations, or the waste. But not wholly so. Large numbers who have lapsed had for a time the benefit of life-insurance protection, while all had a more or less complete opportunity to study and reflect upon insurance principles by the temporary protection and the possession of literature and contracts illustrating the methods and results of The Prudential. The subject has been touched upon in other portions of the work, and need not be reconsidered here in detail, except that it may be pointed out that the sincerity of the Company in its constant efforts to reduce the lapse-rate is, by inference, to be found in the fact that if the Company had never been compelled to lapse a policy it would now have on its books an amount of life insurance vastly in excess of what is actually the case. Instead of having an Industrial premium income of $15,411,254, the annual income would be approximately $63,000,000, and instead of having three and a half million of policies in force, the number would be approximately 12,600,000. Nor can a fair comparison be made with the lapse-rate prevailing in Ordinary companies, for it must be taken into account that the policy-holder of an Industrial company has fifty-two chances to lapse his policy to the, at most, four chances of an Ordinary policy-holder. Still, even when such comparisons are made they are not always to the disadvantage of the Industrial companies, and we have an excellent illustration in the experience of The Prudential, which during the year 1899 revived of the total new Industrial issue 6.1 per cent, against only 4.8 per cent, of the Ordinary issue. Since frequent mention has been made of Industrial paid-up policies, it may not be out of place to state the facts briefly as to SUMMARY OF CONCLUSIONS AND RESULTS. 295 the Company's experience with this feature of business operations during recent years : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1890-1899. PAID-UP POLICIES. YEARS KNDING DEC. SIST. INDUSTRIAL POLICIES. NUMBER. PERCENTAGE OF TOTAL NEW ISSUE. 1890 .... 195 175 130 199 962 1,815 10,695 39,240 32,629 31,333 O.O2 0.03 0.02 0.02 0.06 0.17 1. 12 3.89 3-13 2.24 1891 1802 . 1801 . 1804 1805, . 1896 1807 1898 . . l8qq . 18001800 H7,373 1. 12 According to this table there have been issued during the past ten years 117,373 Industrial paid-up policies, which repre- sent an aggregate total of $4,026,900 paid-up insurance protec- tion. The ratio of paid-up policies to the total new issue was highest during 1897, an d since that date there has been a marked decline. It would be defeating the very objects of life insurance if the surrender values of Industrial or, for that matter, of Ordinary policies were made sufficiently attractive to make such surrender profitable or expedient. It must needs be the aim of every insurance company to attain the primary object of the insurance contract, and entirely too much attention has been given to a question of far less importance than some writers, and especially professional agitators, have attached thereto. It has been the aim of The Prudential to deal equitably with unfortunate policy-holders, and no company has been more ready to make voluntary concessions and grant exceptional privileges than The Prudential. But the managers of the Company have never lost sight of the fact that persistent policy-holders are entitled to 296 HISTORY OF THE PRUDENTIAL. full protection, and it would be a violation of its trusteeship of the interests of millions of policy-holders if, by over-liberal consideration of the few, the entire structure of Industrial insurance should be placed in peril. Hence, the fact deserv- ing of most serious consideration, that in life insurance, to accomplish the purpose of the business, the surrender or lapse of a policy should be at all times a partial loss to the insured, while its revival and persistence in premium payment should at all times be to the advantage of the insured.* If the companies have suc- ceeded in making such exceptional progress, it is largely due to the fact that the largest benefits and best results come to those who maintain the integrity of their contracts and keep their policies in force until death or maturity. f For, as it has been said with much truth, "it is the object of a life-insurance com- pany to pay claims," and this object is largely defeated by the surrender of contracts, which, if kept in force, would have realized much larger returns than are possible on policies voided by the non-payment of premiums during the life-time of the insured. It is, therefore, with special interest that the next table should be studied, as a comprehensive statement of the * In England the question of surrender privileges has received con- siderable attention, especially in connection with parliamentary investiga- tions into the practices and methods of Friendly Societies. In one of these investigations a witness called the attention of the Commission to the fact that the power of a member to borrow on his death certificate of membership was objectionable, for, he stated, "A member may never become entitled to funeral money. It is contrary to the principles of a Friendly Society, and tends to cheat the widow;" and that "Even the borrower thought it bad in the end." (Young's Report, p. 70.) In American Fraternal Societies and Assessment organizations, ostensibly operated for the sole benefit of the insured, there are no surrender provi- sions and no loan privileges, and the same holds practically true for the English Friendly Societies of to-day. t " There can be no question that the company's first duty is to those to whom it remains under contract obligation its continuing policy-holders. It has first to consider how they are affected by a withdrawal of one of their number, how the sure basis of its operations, the solvency of its con- tracts, and the future cost of their administration stand affected. The elements of the problem are definite, the determination of their weight, the measurement of their operative force is somewhat a matter of varying circumstances." (Jacob L. Greene at the Milwaukee Convention of Insur- ance Commissioners, 1898.) SUMMARY OF CONCLUSIONS AND RESULTS. 297 direct financial results to the beneficiaries of policy-holders during the past twenty-four years of active business operations : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1876-1899. TOTAL, DISBURSEMENTS TO POLICY-HOLDERS. YEARS ENDING DEC. 3iST. INDUSTRIAL. ORDINARY. TOTAL. 1876, I 1 >95 8 $1,958 1877 5, 2 9 6 5 2 9 6 1878! 11,338 ",338 l8?Q 23,013 23,OI3 j88o ... 57,256 57,256 !88i 111,508 111,508 !882 157,706 157,706 1883, 222,083 222,083 1884, 322,382 322,382 1885, 418,622 418,622 j886 503,273 ^03,273 !887 841,319 $12 5Q5 853,914 !888 1,091.723 5,161 1,096,884 1889, 1,313,948 17,375 1,331,323 1890, . . 1,725,925 28,973 1,754,898 1891, 2,055,580 49,722 2,105,302 1892, 2,466,406 73,250 2,539,656 1807, 2,811,332 104,876 2,916,208 1804, 3,119,956 117,239 3,237,195 3,655,513 259,978 3,915,491 1896* 4,083,839 322,678 4,406,517 1897, 4,522,932 463,844 4,986,776 1898, . . . 4,861,553 527,850 5380,403 iSOQ, 5,426,545 830,100 6,256,64^ Total, $30.001,006 $2,813,641 $42,714,64.7 It will be observed that, in the aggregate, there has been returned to the Prudential policy-holders and their beneficiaries the vast sum of $42,714,647. The annual disbursements on In- dustrial business have now reached almost five and a half million dollars, to which must be added $830, 100 of returns to Ordinary policy-holders, or a total of payments to beneficiaries during 1899 of $6,256,645, being equal to an average weekly payment of over $i 20,000. How much suffering and want this vast sum mitigates, and partly, at least, prevents by timely assistance, no words can adequately describe. Only those who have an intimate knowledge 298 HISTORY OF THE PRUDENTIAL. of the life and struggle of the industrial population can even faintly understand the deeper meaning of these figures, figures which indicate only in small part the vast amount of good accom- plished through the medium and by the method of Industrial life insurance. But it would, indeed, be a grave error to look upon the results attained in the payment of claims as the sole test of the efficiency and beneficence of this system of insurance. The far more important point is to jemember that there remains in force more than $389,000,000 of insurance protection on the lives of Industrial policy-holders, every dollar of which is fully secured by an adequate reserve safely invested in the very best kind of securities, fully warranting the claim that ' ' The Prudential has the strength of Gibraltar." The finances of the Company, the assets and surplus to policy-holders, and the liabilities, determined by the most careful methods of actuarial valuation as applied to Ordinary life insurance, are fully set forth in the table which follows : THK PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1876-1899. YEARS ENDING DECEMBER 3isx. ASSETS. LIABILITIES. (4*) SURPLUS. (40 1876 $2 2^2 $2,232 1877. 7 ^71 $256 7,115 1878, 21,391 7,034 14,357 l87Q T3Q 8O 3 2Q 265 IOQ 538 1880 168 154 71 I7O Q6 084 !88i 253 853 i?8 067 115,786 1882, 392,269 227,233 165,036 1883, 163,178 387,521 175,657 1884 752 878 423,438 320,440 1885, 1,040,816 635,827 404,989 1886, 1,425,720 1,019,617. 406,103 1887 .... I 067 360 i 480 20 1 487 O78 1888, 2,874,163 2,097,944 776,219 1889 3,024,205 2,853,230 1,071,065 1800 c 084 8qx 3,741,021 1,343,874 1801, 6,880,674 5,440,617 1,449,057 1802. 8,840,853 6,622,411 2,218,442 1801, . . 11,021,445 8,285,884 2,735,561 1804, 13,041,810 10,100,033 2,941,777 1895, 15,780,154 12,470,317 3,309,837 1896, .... IQ 541 828 15,507,711 4,O34,II7 1807, 23 084,^70 18,744,452 5,24O,Il8 1898, 28 887,196 22,008,301 5,888,895 1899 ^,048,760 27,934,337 6,014,421 SUMMARY OF CONCLUSIONS AND RESULTS. 299 There is abundant evidence in this table of inherent strength and permanent financial stability. Year by year material im- provement has been made in the accumulation of substantial assets and of a sufficient surplus, until to-day this margin of safety exceeds six million dollars. As to the investment of the vast accumulation of assets, accumulated and held as a sacred fund for the discharge of maturing obligations, it may be of interest to the reader to know that, of the sum of over thirty-three million dollars (three times the amount of accumulations of only seven years ago), 72.4 per cent, is invested in bonds and mortgages (including railroad and municipal bonds), 13.9 per cent, is in- vested in real estate, 8.3 per cent, consists of cash in bank, 3.0 per cent, is represented by premiums in course of collection, 1.4 per cent, by loans on policies and collateral securities, while i.o per cent, represents accrued interest and rents. Of the liabilities of the Company, 81.8 per cent, represent the reserve to the credit and for the security of policy-holders ; 17.7 per cent, represent the surplus, including capital; and 0.5 per cent, represent other liabilities not included in the two preceding items. Too much stress cannot be laid on the absolute financial secu- rity to millions of policy-holders represented by these figures and facts dealing with the finances of the Company. The whole history of so-called co-operative and assessment insurance is one long record of failure and of fraud, representing untold millions of wasted money and untold millions of unpaid claims, but most of all a record of the shameful betrayal of a sacred trust. It is something very considerably to the credit of the managers of Industrial insurance companies that failure and insolvency have been made impossible by the safe and substantial foundations on which the structure of Industrial insurance rests, and which, as far as human judgment goes, will endure as long as the Republic itself. Where so large a number of business transactions are required, affecting so considerable a number of people as are represented in the policy-holders of The Prudential, it will be of interest to place on record the actual number of employees of the Company on February i, 1900, together with the corresponding data for the year 1885, for which the information has been given in an earlier portion of this work : 3 oo HISTORY OF THE PRUDENTIAL. OFFICE AND AGENCY FORCE OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1885 AND 1900. FORCE. 1885 1900 Executive and. clerical force 12^ 811 Superintendents of Districts 2O3 Assistant Superintendents of Districts, .... Inspectors of Districts, Afifents (Canvassers and Collectors) 150 I 2OO ^6 1,640 7 802 Total Office and Field Force I ^OQ TO AQO To the total force for the present year must properly be added a field medical staff of 3,884 examining physicians, and further 45 employees in the printing department and 46 em- ployees in the home-office building as janitors, elevator attend- ants, etc. The increase in the total office and field force during the period 1885-1900 has been 595 per cent. , while during the same time the business operations of the Company, as measured by the amount of Industrial insurance in force (not taking into account the Ordinary business), have increased 863 per cent., in other words, the large increase in employees has been made necessary by the still larger increase in business operations. The increase is perhaps best illustrated by the average weekly issue of new policies, as shown in the following table for the three years, 1879, 1889 and 1899 : AVERAGE NUMBER OF NEW POLICIES ISSUED WEEKLY BY THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1879, 1889, 1899. INDUSTRIAL. ORDINARY. WEEKLY ISSUE. WEEKLY ISSUE. l8?Q 600 1889, 13,881 25 1800. 26 950 1,044 SUMMARY OF CONCLUSIONS AND RESULTS. The actual extent of business operations will be more clearly realized in this statement of weekly office transactions reaching now an average issue of more than 28,000 new policies, and weekly claim payments exceeding $120,000. A very interesting and suggestive illustration of the develop- ment and highly complex nature of the business of Industrial insurance is supplied by the statistics of the Printing and Supply Departments of The Prudential. According to the returns for the year 1899, these two departments employ more than sixty persons, while nine presses are kept continually at work to meet the demands of the office and field force for the large number of forms and different kinds of supplies required. During 1899 there were shipped daily by express, or otherwise, three and one- half tons of matter pamphlets, paper, forms, letter-heads, etc. A large amount of the necessary printing includes the issue of two regular publications : "The Prudential," for distribution to the Industrial policy-holders, and "The Weekly Record," for distribution to the field force. * ' The Prudential ' ' is issued every other month, the edition never being less than two million copies. This paper contains much useful information on the subject of Industrial insurance, rate tables, health notes for the home, and a list of current claim payments. " The Weekly Record " is for the field force, and contains, in addition to useful information on the subject of life insurance, a record of the results obtained from week to week by the principal Superintendents, Assistants and Agents of the Company's field force. " The Weekly Record" has proven a most useful element in the development of an esprit de corps and acts directly as an incentive and an encouragement to increased efforts on the part of those who are making a deter- mined struggle for individual success and leadership as Industrial life underwriters. So much having been said as regards extent of operations, some information as to the class of people insured on the Industrial plan with The Prudential Insurance Company may be of interest. This question can be answered in a number of ways, but I confine myself to data relating to the nationality and occupa- tion of the insured. First, as regards race and nationality, it will be recalled that it is not now the practice of the Company to solicit negro risks, on account of adverse legislation compelling Industrial companies to grant the same benefits to persons of color as are 302 HISTORY OF THE PRUDENTIAL. paid to whites, in contrast to the recognized fact that the for- mer are subject to a death-rate about 50 per cent, higher than the latter. Hence the proportion of colored persons is smaller than would be the case were the former and more equitable prac- tice still in vogue. Of the total number of decedents in the Industrial experience of The Prudential during the period 1891- 1898, only 2.5 per cent, were persons of color. NATIONALITY OF DECEDENTS INSURED UNDER INDUSTRIAL POLICIES IN THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. 1808. NATIONALITY OF DBCEDENTS. PER CENT. OF TOTAL MORTALITY. Nat Bon ive-Born .... 62.18 22.07 12.01 0.94 0.74 0.65 0.29 0.29 0.27 0.26 0.20 0.04 O.O3 0.03 a in the United Kingdom, , . Germany, Canada, ... Austria-Hun *ary Scandinavia Switzerland, Russia Poland and Finland Italy France ... . .... Holland and Belgium, .... ... South America, Mexico and West Indies, . . Spain, Portugal and Azores, Asia, Africa and Turkey, It is shown in this interesting tabulation, as far as I know, the first of its kind relating to Industrial insurance, that of all the deaths during the year 1898, 62.2 per cent, were of persons of native birth. Unfortunately, no data are at the command of the Company as to the parentage of the insured, this question not being asked in the application, but the fact is, nevertheless, signifi- cant that the larger proportion of the insured in The Prudential are native-born. Next in numerical importance to those of native birth come persons born in the United Kingdom, but of the latter the majority are Irish, who,, as is well known, form a very large proportion of the population of the United States. Natives of Germany form 12.0 per cent, of the total insured, while the re- mainder is made up of practically every nationality forming the SUMMARY OF CONCLUSIONS AND RESULTS. 303 heterogeneous population of this country,* The fact that so large a proportion of Germans should be insured is of considerable interest, since it is generally conceded that this element of our population is not only of a most thrifty and saving disposition, but also at the same time the most cautious and prudent in making life-insurance provision on plans not likely to lead to disappoint- ment and litigation. It may not be out of place to add, by way of comment, that during recent years Industrial insurance on the plan of The Prudential has made very material progress in Ger- many, in spite of the fact that compulsory government insurance is supposed to meet all of the needs of the working population, and with German thoroughness a hand-book on ' ' Die Kleine lyebens-Versicherung ' ' has recently been published as a guide for prospective insurers. The facts pertaining to the nationality of the insured popula- tion are, therefore, confirmatory evidence that the class of people insured with Industrial companies represents a normal proportion of natives and foreigners, and that it is an error to suppose that the demand for this form of insurance is largely limited to the foreign-born or to a distinct element of the emigrant population. While we have no absolute test as to the moral or mental char- acteristics of these people, we at least have the proof that no special selection of a distinct class or element of the population exists, and that, in view of the large proportion of native-born policy-holders, the system of Industrial insurance must properly be looked upon as national in its scope and operations. A still more satisfactory test as to the character of the class of risks accepted by The Prudential is supplied by a detailed state- ment of the principal occupations of the insured, and for this * During 1899 The Prudential Insurance Company paid Industrial claims in the following countries : Australia, Austria, Azores, Belgium, Canada, China, Denmark, England, Germany, India, Ireland, Italy, Norway, Russia, Scotland, South Africa, Sweden and Switzerland. Since the Company does not transact business outside of the United States, all of the claims paid in foreign countries represent policies origi- nally taken out in the United States, but continued in force after the return of emigrant policy-holders to their native land. This list does not include claims paid in Cuba, Puerto Rico, the Phil- ippines and the Sandwich Islands, or on sailors and soldiers in the service of the United States. 34 HISTORY OF THE PRUDENTIAL. purpose I have taken account of the occupation of those who died during the two years 1897 and 1898 : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. PRINCIPAL OCCUPATIONS OF WHITE MALES. INDUSTRIAL MORTALITY EXPERIENCE, 1897-1898. TOTAL NUMBER OF MALE DECEDENTS (AGED 15 AND OVER), 24,237. Letter Carriers, Policemen, . . Soldiers, . . . Actors, Lawyers, Judges, etc., Clergymen, Musicians, Photographers, . . . Physicians, Teachers, Veterinary Surgeons, NO. 27 7i 139 18 23 13 5i 19 i? 19 ii Barbers, 189 Hotel-keepers, 93 Sextons, 14 Watchmen, 267 Drivers, Truckmen, .... 951 Elevator Men, 17 Railway Employees, .... 489 Telegraphers, 30 Boatmen, 64 Longshoremen, 68 Pilots, 10 Sailors, 72 Captains, 30 Bakers, Confectioners, ... 211 Druggists, 145 Grocers, 206 Hardware Dealers, 116 Liquor Dealers, 197 Bartenders, 211 Merchants, Dealers, .... 260 Millers, 37 Salesmen, 197 Undertakers, 43 Agents, 174 Book-keepers, 156 Brokers, 1 1 Clerks, 665 Stenographers, u NO. Tobacco Workers, 238 Electrical Workers, .... 273 Gas Workers, 117 Glass Workers, 123 Jewelers, . 166 Gold and Silver Workers, . . 171 Brass Workers, 71 Copper Workers, n Blacksmiths, 401 Iron Workers, 715 Tin Workers, 145 Shoemakers, 558 Tanners, 65 Machinists, 460 Paper Workers, 40 Printers, Compositors, . . . 223 Lithographers 27 Rubber Workers, 20 Hatters, 133 Tailors, 350 Carpet Workers, 30 Silk Workers, 73 Ropemakers, 21 Spinners and Weavers, . . . 144 Coopers, 171 Carpenters, Cabinetmakers, 1,002 Contractors, 53 Masons, 401 Brickmakers, 33 Marble Workers, 32 Plumbers, 201 Potters, . . . Stone-cutters, Painters, Roofers, . . . Riggers, . . 53 122 550 4 8 18 Farmers, 704 Gardeners, 209 Fishermen, 57 Miners, 442 Quarrymen, 29 Engineers, Firemen, .... 364 SUMMARY OF CONCLUSIONS AND RESULTS. 305 The white adult male decedents in The Prudential's Indus- trial experience of 1897 an ^ l8 9 8 ma Y De grouped, according to occupation, as follows : OCCUPATIONS. No. PER. CENT. OF TOTAL. Trades, Industries and Manufactures, . . Laborers 5,872 4QAA 24-2 2O 4. Merchants and Dealers . .... 322T T2_ 7 Building and Construction, ..".... Transportation and Communication, . . . Agriculture Mining Fisheries 2,979 2,036 i 704. 12.3 8. 4 7.O Personal Service 1,4.4.0 6.0 Professional Service, Government and Defense . . . 456 *i4 x-9 i ? No Occupation and Unstated . I 1^2 4 8 Total 24. 2^7 IOO.O These tables bring out very clearly the truly industrial character of the business, and, had space permitted, a more detailed list of occupations would have shown that practically every profession, trade and industry is represented among the policy-holders in about the same proportion as in the general population according to the United States census of 1890. It is shown that among the insured are clergymen, lawyers, justices, physicians, teachers, soldiers, sailors, firemen and policemen ; every form of social life finds its representation, though, as a matter of course, the larger proportion of the insured are laborers, skilled and unskilled, employed in the numerous industries and trades. It is a matter of regret that it is not possible to give the exact number of persons insured in the various occupations, but a statistical investigation of the occupation of the living would hardly be productive of sufficiently important practical results to warrant the necessary expenditure of money and time for tabulation and analysis, dealing, as The Prudential does, with millions of policy-holders ; but the mortality returns here given will be sufficient to indicate the truly industrial nature of the business. Estimates of the probable number insured, based on the number of deaths during two years, have been made by the writer, but so many factors have to be taken into consideration that the results can be only approximately correct. Still, as regards the most important occupations it may be of interest to the reader to 306 HISTORY OF THE PRUDENTIAL. learn that, on the basis of the best available data, The Prudential in 1898 had approximately 113,100 laborers, 27,343 teamsters and drivers, 30,700 carpenters, 20,300 iron and steel workers, 18,000 farmers, 34, 700 clerks, 14, 600 shoemakers, 18,200 printers, 24,100 railway employees, 17,900 miners and 16,000 machinists insured on the Industrial plan of life insurance. As to the occupations of women, I have afso been compelled to limit my table to a small number of interesting employments and pursuits. The proportion of the sexes of the insured is, in the Industrial experience of The Prudential, about the same as in the general population,* and, as must necessarily be the case, a large majority of insured women are housekeepers. For the remainder I give a table illustrating the truly industrial and national character of the business of the Company : THE PRUDENTIAIy INSURANCE COMPANY OF AMERICA. PRINCIPAL, OCCUPATIONS OF FEMALES. INDUSTRIAL MORTALITY EXPERIENCE, 1897-1898. TOTAL NUMBER ADULT (AGED 15 AND OVER) WHITE FEMALE DECEDENTS, 23,837. Actresses, 8 Artists, 5 Musicians, 15 Nurses, 96 Teachers, 43 Cashiers n Clerks, 101 Stenographers, 23 Book-binders, 34 Boxmakers, 21 Carpet Weavers 15 Telegraph and Telephone Operators, 6 j Corsetmakers, 13 Saleswomen, 63 Dressmakers, Seamstresses, . 414 Store-keepers, 34 Milliners, 56 Book-keepers, 33 I Silk Workers, 54 This table does not require further comment, but has been included in the series as a rather interesting contribution to our knowledge of woman's share in life-insurance development. While in Industrial insurance it is the practice to place a small policy on every member of the family rather than a large policy upon a single member, women, as a matter of course, have been \ * Of the total number of decedents in the Industrial experience of The Prudential during the period 1891-1898, 51.2 per cent, were males and 48.8 per cent, were females. According to the United States census of 1890, 1 ' Vital and Social Statistics, ' ' Part III. , the sex distribution of the total mor- tality in the United States was 52.2 per cent, males and 47.8 per cent, females. SUMMARY OF CONCLUSIONS AND RESULTS. 307 insured in about the same ratio as men, but the good effect of life insurance in early life is illustrated in the increasing number of self-supporting young women, who continue in force the insur- ance placed upon their lives in early infancy by parents whose memory must needs be held in higher esteem for this evidence of prudent forethought and affectionate regard. These facts pertaining to the nationality and occupations of the insured will make it plain that the business is one which is ap- plicable to all sorts and conditions of men, and that it is truly national and industrial in its scope and extent of operations. Perhaps the best proof of this assertion is to be found in the fact that, in the city in which The Prudential was founded, in 1875, the large majority of the population are now insured on this plan of family insurance. In Newark, N. J., during the year 1899 there occurred, according to the Board of Health, 3,548 deaths of persons one year of age and over. Of this number 1,307, or 36.8 per cent., were insured in The Prudential, while in the other Industrial companies, as far as my information goes, about an equal number of policies were in force, indicating a total of about 73 per cent, of the population above age one insured on the Industrial plan. If we exclude the lowest pauper class and the well-to-do or rich, who are above the need of Industrial insur- ance, it will be seen that in this city, to-day one of the leading manufacturing cities of this country, but a very small proportion of the working people have not as yet availed themselves of this form of insurance as a means of providing against some of the uncertainties of human life. As to the direct effect of this form of insurance on the dimi- nution of the rate of pauper burials, once exceedingly high in the city of Newark, we find evidence in the official returns, for, taking account of the last twenty years, there has been a very material reduction in the rate of burials at public expense. In 1880, when The Prudential had only 49,959 Industrial policies in force in the State of New Jersey, the rate of pauper burials in the city of Newark per 100,000 of population was 128, while in 1899, with 36.8 per cent, of the population over one year of age insured in The Prudential, the rate was only 93. It will be apparent that in this direction alone the Industrial companies save a not inconsiderable amount to the taxpayer and the com- munity. 3 o8 HISTORY OF THE PRUDENTIAL. Pauper burials statistics for a number of American cities for a period of considerable length are, unfortunately, not obtain- able ; but I have brought together the returns for ten principal cities, which have been consolidated in the following table. The results are for five-year periods for the twenty years 1880-' 99, and include the cities of New York, Boston, Newark, Cincinnati, Baltimore, Indianapolis, Minneapolis, Cambridge, Worcester and Charleston, S. C. The table indicates a constant, though gradual, decline in the rate of pauper burials from 210 per 100,000 during 1880-' 84 to 156 during 1895-' 99 : PAUPER BURIALS IN TEN AMERICAN CITIES, 1880-1899. PERIODS. AGGREGATE POPULA- TION OF TEN CITIES. AGGREGATE NUMBER OF BURIALS. RATE PER 100,000. l88o '84 j-i i/ic: 24.8 27 087 2IO 188^ '80 jc 207 ^4^ 2Q 74.7 IQl l8QO 'Q4. 17 623 68^ ^u 180 188 i895-'99,'. .... 20,854,451 32,614 156 Since by means of Industrial insurance frequent provision is made for dependent widows and orphans, we should also expect a decrease in the cost of out-door relief, in spite of the fact that ' ' this is an age of free if foolish giving. ' ' In Newark during 1880 the cost of out-door poor relief was $29,818, or $0.22 per capita, against a cost of only $17,158 during 1898, or of $0.07 per capita. Had the rate of 1880 prevailed in 1898, the actual cost to the taxpayers would have been $52,607. A not inconsiderable share of this reduction must be credited to the Industrial companies, which through their large claim dis- bursements, now exceeding $16,000,000 annually, are the direct cause of a vast diminution of pauperism and want.* Indirectly the effect of the system is to be traced in the increased habits of * A typical instance of the direct relation of Industrial insurance to public welfare is furnished by a case referred to in the Orange (N. J.) Journal of December 2, 1899, in which reference is made to the death of a Mrs. Ellen Clark, who, on account of illness, had for more than two years been under the care of the poor authorities and the management of the Memorial Hospital. The item concludes with the statement that "the expenses of her funeral were met by an insurance policy which had been kept in force by a charitable woman." SUMMARY OF CONCLUSIONS AND RESULTS. 309 savings and thrift in other directions, but especially in the growth and development of savings banks and building and loan associa- tions. In the State of New Jersey there were 73,052 depositors in savings banks in 1880, while the number of Industrial policy- holders was only 49,959, while in 1899 tne number of depositors had increased to 190,941, against an increase to 613,552 of Indus- trial policy-holders in The Prudential. It will be recalled that in 1872, before the organization of Industrial companies, the L/abor Commissioner of Massachusetts had pointed out that sys- tematic savings among working people were the exception rather than the rule, while now it may be said that systematic savings habits are the rule * either in the direction of deposits in banks or payments to building and loan associations, and this result must be largely attributed to the missionary work of Industrial companies, like The Prudential, teaching the masses habits of thrift not only in one, but in many directions. I can only very briefly touch upon the medical statistics of the Company. Naturally in a branch of life insurance so radically different in its methods and extent of operations from Ordinary life companies, the mortality experience, the disease and accident occurrence must widely differ from the observed experience of companies limiting their risks to adult males of the more pros- perous elements of the population, and as regards medical exam- inations in Industrial insurance they are, as a matter of course, less rigid than is the case in Ordinary life insurance. This is shown by the ratio of rejections of examined Industrial business (Prudential experience 1899) , which was only 1.5 per cent, against a ratio of 15.5 per cent, in Ordinary. In other words, among the Industrial class of risks practi- cally all applicants are accepted, and naturally a higher mortality * It is much to be regretted that it is impossible to furnish information as to the average number of deposits per annum made by depositors in American savings banks at the present time. In reply to an inquiry addressed to the Board of Commissioners of Savings Banks of Massa- chusetts, I am informed that the investigation made in Massachusetts in 1872 was the only instance in which the information has ever been given. The considerable growth of Dime Savings Banks and Penny Provident Funds during the past twenty-five years would, however, give direct sup- port to the assertion that Industrial insurance has been directly, as well as indirectly, a force making for the education of the masses in habits of sys- tematic saving of small sums (ante, p. 25). 3 io HISTORY OF THE PRUDENTIAL. experience must result. Dangerous and unhealthy occupations are not discriminated against, as is evidenced by the table of occu- pations showing the large proportion of men employed in mines, the railway service, at sea, and in other dangerous occupations. These occupations are subject to a higher mortality, which finds its corresponding result in higher premium rates. The table which follows has been limited to thirty principal causes of death observed in the Industrial experience 1891-1898, and is only intended as evidence confirming facts previously stated : INDUSTRIAL MORTALITY EXPERIENCE OF THE PRUDENTIAL INSURANCE COMPANY. THIRTY PRINCIPAL CAUSES OF DEATH. 1891-1898. NUMBER. PKR CENT. OF TOTAL MORTALITY. Tubercular Diseases, 36,107 Pneumonia, 25,851 Heart Diseases, 16,881 Bright's Disease, 13,438 Accidents, 10,343 Diphtheria 9, 403 Apoplexy, 9.228 Cancer, 7,348 Bronchitis, 7, on Gastritis, 5,97* Meningitis, 5,526 Typhoid Fever, 4,837 Croup and Laryngitis, 4,559 Paralysis, 4,035 Diseases of the Liver, 4,012 Diarrhoea and Dysentery, 3,821 Scarlet Fever, 2,711 Peritonitis, 2,331 Diseases of Women, 2,253 La Grippe, 2,234 Old Age, 2,062 Convulsions, ,734 Cholera Infantum, ,721 Suicide and Homicide, ,632 Rheumatism, ,395 Asthma, ,274 Malarial Fever, ,160 Dropsy, ,104 Insanity, ,084 Pyaemia and Septicaemia, ,034 All other causes, 25,058 Total, 217,158 16.63 11.90 7-77 6.19 4.76 4-33 4-25 3-38 3-23 2-75 255 2.23 2.10 .86 -85 .76 25 .07 .04 03 o.95 0.80 0.79 o-75 .0.64 0-59 o-53 0.51 0.50 0.48 n-53 IOO.OO SUMMARY OF CONCLUSIONS AND RESULTS. The most important cause of death in the Industrial mor- tality experience of The Prudential is shown to have been con- sumption and other tubercular diseases, forming'i6.6 per cent. of the total mortality from all causes. Next to tubercular diseases we note an excessive mortality from pneumonia, responsible for 11.9 per cent, of the total deaths. The proportion of deaths from heart diseases and Bright' s disease was 7.8 per cent, and 6.2 percent., respectively, while accidents were responsible for 4.8 per cent, of the mortality from all causes. In comparing this mortality experience with the mortality of the general popula- tion, the fact must not be lost sight of that, it being the practice of the Company to accept risks on all healthy lives one year of age and upwards to the year seventy, deaths under the age of one are not represented in the mortality experience of the Com- pany. The age distribution of the mortality is, however, fully disclosed in the next table, showing the actual and relative numbers of deaths at various groups of age : INDUSTRIAL MORTALITY EXPERIENCE. 1891-1898. WHITE MAIZES AND FEMALJBS. PROPORTION OF DEATHS AT VARIOUS AGES IN 100 DEATHS AT ALL AGES. AGES AT DEATH. MALBS. FEMALES. 2- 4. 13.6 I^.i 5-9 IO 14. 6.6 2C 6.7 27 ic IQ 37 3Q 2O24. ; 6 7 * 8 2^ 2Q. 6 7 5 ' 6 4 JO -1A 70 c ft 2Z T.Q 68 o* 5T 4O-44 6 * OO IJ >* J J J I,O4O,OOO 2O,OOO 56^,804 Allowing new policies to be written in full immediate benefit if original policies are lapsed 27 OOO Allowing policies that have been lapsed to be revived without the payment of arrears in premiums, such ar- rears being a non-interest bearing lien on the policies, (Not estimated.) Total estimated value of concessions $2 T 80 80 A Only the more important concessions are referred to in this table. Minor concessions, such as the rule under which the first two weeks' premiums are returned on request if policy is not satisfactory, the removal of the consumption and suicide clauses, the lien clause under which lapsed policies can be revived with- out the payment of arrears, the lien bearing no interest, and many others referred to in other parts of this work, cannot be conveniently calculated, but as the matter stands it is shown that the Company, during fourteen years, has made concessions to policy-holders, whose original contracts did not provide for privileges offered new insurers, to the extent of $2,180,894. ^ n other words, the Company never advanced a step, never made a distinct improvement in its policy contract, but it made such privileges and improvements retroactive to all policy-holders, 314 HISTORY OF THE PRUDENTIAL. irrespective of the fact that under the original contracts policy- holders would not have been entitled to increased benefits in one direction or another. Does not this account for the fact that The Prudential holds so high a place in public esteem? Is it not clear, in the light of these facts, known to millions of our most intelligent working people, that The Prudential has been just, has been liberal, has been fair in its dealing with the masses, in marked contrast to the shameful betrayal of their interests in the past by thousands of concerns of whatever name, trading under the title of insurance organizations, largely, if not solely, for the purpose of personal profit? Of all the beneficiaries to whom claims were paid by The Prudential during 1899, approxi- mately 50 per cent, received more than their original contract called for. Can any Ordinary, any Assessment, any Fraternal Insur- ance Company or Society point to a similar record of prudence, equity and liberality ? Where so much has been done, there need be no doubt but that still further and still greater advance- ment will be made, but The Prudential will ever remain loyal to its early principles, will take no steps which are not based on its own experience, supported by observed facts. These summaries and brief restatements of facts previously touched upon cannot fall very short of making clear the vast extent in operations and far-reaching economic and social con- sequences of this form of life insurance in the United States. They will make clear that the business is the result of evolution- ary forces making for ages for an improved system of protection against the most immediate and socially important wants of the masses ; they will have shown that Industrial insurance rests on a firm foundation, and that it enjoys the highest possible confi- dence and appreciation on the part of millions of our country's best and most respected class of industrial workers ; that it in- cludes the heroes of peace as well as of war ; that it ministers to the wants of the young, the middle aged and the old ; that it is national in its scope and extent, and that it has therefore a place in the social and political economy of the nation, well deserving of the most serious consideration of the statesman, the economist, and the social reformer. It has been shown that, from the stand- point of public policy, this system is worthy of State approval on the ground of a decrease in public burdens and the diminished need of private charity and aid, and in the corresponding increase SUMMARY OF CONCLUSIONS AND RESULTS. 315 in the savings habits of the people and the longer life which must result from improved conditions of social life. Most of all is Industrial insurance deserving of public respect and consideration in a Republic where the will of the majority is law, where the wishes of the masses are respected, where measures and tendencies meeting with extensive public ap- proval are looked upon as evidences of progress in the direction of a higher and better life. The verdict of the masses, of the best ele- ments of our industrial population, is certainly in favor of this form of insurance. However humble this struggle on the part of the working people to improve the conditions of their social and family life, the results, in the aggregate, are of almost stupendous propor- tion ; and who will say that it is not true in this particular, as it has been pointed out by Mr. Lecky to be true in general, that " It i s * * # * Industrialism that has brought into the world that strong sense of the moral value of thrift, steady industry, punctuality in observing engagements, constant forethought -with a view of providing for the contingencies of the future, which is now so characteristic of the moral type of the most civilized nations. ' ' = Limited in space and time, I have, no doubt, fallen short in my aim to produce a work useful to the student of economics and social problems, a work which, while in a measure the history and record of events relating to The Prudential Insur- ance Company of America, is yet largely the history and record of events relating to the business as a whole. While I cannot have answered all of the many questions relating to the business which have in times past assumed more or less public importance, still, every effort has been made to meet reasonable expectation by a full and detailed treatment of the most important points of controversy. If it is said that a statement of the facts coming from one actively employed in the business of Industrial insurance must needs fall short of the highest requirements of critical examination, the answer is that the writer has kept in mind the well-known expression of Th. Ribot, that "It is a complete mistake to suppose that what is not true can be scien- tifically established, "f and with these words of proper caution I * The Map of Life, p. 53. f Heredity, p. 183. Appleton & Co., N. Y., 1891. 316 HISTORY OF THE PRUDENTIAL. have approached my task, and trust that I have done the under- taking justice. At least, I have added to the rather limited body of available information relating to life-insurance practice and results a work containing the record of one institution to which the industrial population of this country is indebted for a new form of insurance, which has, forever, done away with the former crude and primitive types of so-called insurance societies and attempts to transact on the ancient basis of status a highly com- plex and intricate form of business enterprise, a business resting on recognized laws of human mortality and finance and possible of successful operation only on the basis of contract, the founda- tion principle of modern social life. Years of personal experience in the field of actual business operations, personal contact with hundreds of thousands of our working population of all nationalities in various parts of the country, have convinced me that, after all that has been said and written on the progress of the masses during the past fifty years, but scant justice has been done the people in the fully deserved recognition of their efforts to improve the conditions of their daily life in a manner and a way most likely to bring about the realiza- tion of their, perhaps indefinite, yet strong and worthy, aims. There are those who think little of what the workingman does for himself, who think that most of their progress and improvement is the result of charitable or philanthropic efforts, but I, for one, share no such views. Years of experience have forced upon me the conviction and belief that the working people can be trusted in matters pertaining to the solution of their own problems, and that they will accomplish more by agencies of their own than by artificial agencies devised by others. In the true and emphatic words of Mr. Herbert Spencer, ' ' Which is the more misleading, belief without evidence, or refusal to believe in presence of overwhelming evidence ? ' ' and "If there is an irrational faith which persists without any facts to support it, there is an irrational lack of faith which persists spite of the accumulation of facts which should produce it ; and we may doubt whether the last does not lead to worse results than the first."* I feel convinced that the facts here brought together will lead those who for the first time learn of * The Ethics of Social Life, Part IV., g 133. SUMMARY OF CONCLUSIONS AND RESULTS. 317 the vast extent of Industrial insurance, and the far-reaching results which have been accomplished through the work of The Prudential and other Industrial companies, to seriously consider whether this form of thrift and evidence of a healthy, robust struggle for economic independence, on the part of millions of working people, is not more deserving of approval and respect and sympathetic consideration than the many and far more costly eiforts to ameliorate the condition of the people by artificial means through the medium of public or private charitable agencies. In simple justice to the wage-earners of this country, I feel con- vinced that never were words of Mr. Spencer more applicable to the affairs of daily life than in the following sentence, deserv- ing to be engraved on the mind and memory of all who have the best interests of the masses at heart : "The average legislator, equally with the average citizen, has no faith whatever in the beneficent working of social forces, notwithstanding the almost infinite illustrations of this beneficent working. He persists in thinking of a society as a manufacture and not as a growth : blind to the fact that the vast and complex organization by which its life is carried on, has resulted from the spontaneous co-operations of men pursuing their private ends. Though, when he asks how the surface of the Earth has been cleared and made fertile, how towns have grown up, how manu- factures of all kinds have arisen, how the arts have been de- veloped, how knowledge has been accumulated, how literature has been produced, he is forced to recognize the fact that none of these are of governmental origin, but many of them have suffered from governmental obstruction ; yet, ignoring all this, he assumes that if a good thing is to be achieved, or an evil prevented, Parliament must be invoked. He has unlimited faith in the agency which has achieved multitudinous failures, and has no faith in the agency which has achieved multitudinous successes. "* It was this clear recognition of social and economic laws and forces which made it possible for Mr. John F. Dryden to com- pletely realize his early ambition, and succeed in the laudable endeavor to make a success of Industrial insurance and The Prudential Insurance Company of America. And nowhere, to my knowledge, has this been stated more clearly and precisely * The Ethics of Social Life, Part IV., 133. 318 HISTORY OF THE PRUDENTIAL. than in Mr. Dry den's own words, in his presidential address at the reunion of officers and agents on January 10, 1900, than which I can select none better to conclude this sketch of the ' ( History of The Prudential Insurance Company of America ' ' : "This is a wonderful business, gentlemen, in which you are engaged. I speak of it now not from the confines of The Pru- dential's work, but from that great, broad arena which compre- hends the whole scheme of life insurance, and may be found in operation in every country of the civilized world a business with a noble history, a business with a lofty aim, a business with a magnificent purpose, a business with splendid results. Like most good and enduring things, its birth was humble and early advancement difficult. Originating back in remote antiquity, it has moved forward by slow stages, but in regular gradation, until to-day it stands upon a solid basis and challenges the admiration of the whole world. It could not be removed from the great scheme of the social and political economy of our civilization without bringing a disaster upon the human race which no man can foresee or measure, and that particular part of the plan, gen- tlemen, which has from its beginning characterized the history of The Prudential is more marvelous than all the others. " Taking its root in human affection, in that lofty desire to provide for one's own, the germ of it lying back out of our sight, even before recorded history began, it has gone on by a process of evolution first the gild, then the burial societies, then the friendly societies until at last it has been placed upon an immu- table and scientific foundation, and we have the Industrial insur- ance company. An Industrial company like The Prudential offers to the people a perfected and well-rounded-out scheme of life insurance, in that it places its blessings within the reach of all classes, male and female, rich and poor alike. It is the. highest development of life insurance in existence. ' ' INDEX. 319 INDEX. PAGE. A A, B, C of life insurance, Indus- trial insurance the, 190 Administration of agencies, . . . 270 Adult rate table, five-hundred dol- lar, 126 ; colored, 138 ; 1896, . 228 Advertisement of The Prudential, the Rock of Gibraltar, . . 267 American Exchange and Re- view on paid-up Industrial policies, 188, 189 Arena, Industrial insurance dis- cussed in the, 190, 191 Adverse legislation (see Children, Negroes, Surrender value). Agency system dispensed with, . 59 Agents, life insurance, a necessity, I4 59. 86; praise of, 14, 231, 249, 263, 265, 268 ; to their in- terest to prevent lapses, 123 ; importation of English Indus- trial, by Metropolitan, 132 ; In- dustrial, as insurance teachers, 148 ; class of men employed as, 149, 271 ; fraudulent Indus- trial, 149 ; ex-, an injury to companies, 149 ; liberal treat- ment of Prudential, 156 ; diffi- culties of Industrial, 169 ; new terms to Prudential, 184 ; In- dustrial-Ordinary, 231, 242 ; faithful Prudential, 232, 233 ; inducement to, 238; instruc- tion of, 240 ; evidence of good character of, 241 ; position of Industrial, 241 ; evidence of PAGE. confidence in, 257, 261 ; Phil- lips Brooks on, 263 ; straight canvassing, 269 ; management of, 270, 271 ; loyalty of the Prudential, 282 ; number of, in the Prudential force, 1885- 1900, 300. Ages, proportion of deaths at early, 311, 312 Ages at death in the Prudential's experience, 1891-1898, . . . .311 Aid Societies in New York State, 1848-1866, 16 Aldcroft, W. H., on Industrial insurance, 223 Alexander, Mrs. L. F., on Indus- trial insurance, 280 American Humane Association, misstatement in report of the, 200 American Life Insurance Compa- ny, of Philadelphia, Industrial business of the, 167 American Manual of Life Insur- ance, The 8 American Popular Life, weekly premium payment plan of the, 21 Amounts of insurance, Prudential Friendly Society, 83 Assets of The Prudential, i876-'99, 298 Assets, investment of, 299 Anglo-Saxon thrift defined, ... 4 Anniversary, Tenth, of The Pru- dential, 156 Annuities, Industrial, 100 Application form, new, 240 320 INDEX. PAGE. Applications, to The Prudential Friendly Society, analysis of first 1,000, 79- 8 3 Approval, of Industrial Insurance, previous to 1875, 53 ; by insur- ance journals, 130, 147 ; offi- cial, 119, 134. 135, 155, 160, 161, 180, 199, 206, 223, 224, 263, 273- 276 ; general, 158, 159, 180, 221, 264, 268, 278 ; public, 196-198, 216, 217, 276, 277, 281 ; legis- lative, in Colorado and Ohio, 281. Army and Navy, permit to Pru- dential policy-holders to serve in, 254, 255 Arrears, notification of persons in, 123 ; allowed delinquents, 244. Association, the principle of, 6 ; perversion of the principle of, 19. Assurance Associations, Parlia- mentary Report on, 5 Attacks on Industrial insurance, 145 ; by ex-agents, 149 ; by newspapers, 150, 199, 200 ; in Colorado, 198 ; nature of, 206, 207; in 1895, 213; in Massa- chusetts, 217, 229, 230 (see also Negroes, Children, Sur- render value). Baltimore Underwriter, on Indus- trial insurance, 178; on The Prudential, 195, 196, 247, 248. Barry, Dr. Mary F., approval of Industrial insurance, 281 Bartels, Arthur, effort to pass Col- orado House Bill No. 317, . .272 Bassett, Allen L., first president of The Prudential Friendly Soci- ety, 70 ; and the Industrial Insurance Company of the United States, 114, 115. PAGE. Beade, Rev. J. B., on Industrial insurance, 9 Beneficence of Industrial insur- ance (see Value of). Benefit, public, of Industrial in- surance (see Value of). Benefit societies, fallacies of, . . 131 Benefits, additional, after five years, 236 ; value of, increased by The Prudential, 313, 314. Bettle, Hon. Wm., on Industrial insurance, 273 Blanchard, Noah, president of The Prudential Insurance Co. of America, 70; death of, 144, 145. Board of Trade, Newark, investi- gation of Industrial insurance by the, 91 Bonds, reduced fees for agents', 241 ; agents', no longer re- quired, 252. Booth, Chas., on Industrial insur- ance, 164 Boston Herald, on mass insurance, 12 ; on Industrial insurance, 178-180; on life insurance of children, 179 ; on adverse legis- lation, 229. Boston Standard, on Butler'sattack on Industrial insurance, 150; on life insurance of children, 172 ; on The Prudential, 191, 192. Bradley, Mrs. Annie B., on Indus- trial insurance, 279 British Industry, the, 9 Brooks, Phillips, on life-insurance agents, 263 Bund plan, a failure, 27, 103 ; of the Metropolitan, 28, 102 ; of the New York Life Insurance Co., 28, 29; of the Western New York Life Insurance Co., 29; of the Life Insurance As- sociation of America, 29 ; of life insurance, 38 ; opposed by the Insurance Times, 39, 67 ; of the Prudential League, 89. INDEX. 3 2I PAGE. Burial, decent, of the dead, 4 ; the object of Industrial insurance, 4, 143- Burial clubs among the English, . 5 Burial expenses, primary object of Industrial insurance, .... 4 Burial insurance a necessity, ... 32 Burials of paupers (see Pauper burials). Burnett, Dr., tribute to John F. Dryden, . . no Butler, Ben j., attack on Industrial insurance, 149 ; on the life in- surance of children, 149, 150. Camden Daily Telegram on The Prudential, .... 266, 267 Canvassers, advertisement for, . 86, 87 Canvassing, straight, advocated in 1853, 12 ; method of, 250. Capital, increase of Prudential's, 192 Carlstadt Freie Presse on The Prudential, 143 Charitable institutions, R. T. Ely on, 41 ; not in touch with in- dustrial conditions, 151. Charitable relief and Industrial insurance, 307, 308 Charities, Associated, of Boston, on Industrial insurance, . 278, 290 Charity, W. G. Sumner on, 41 ; life insurance not, 34, 41, 144, 203 ; Industrial insurance not, 34, 144, 203 ; vs. Industrial in- surance, 203. Charity Organization Society, of Philadelphia, on Industrial in- surance, 172 Charity Society of Louisville on Industrial insurance, 216 Chicago Relief and Aid Society, Fortieth Report, reference to Industrial claim payment, . . 290 Child Endowment, policies issued by The Prudential, 192 ; ex- plained, 192, 193. Child Insurance, a misnomer, . . 120 PAGE. Child life, value of, attempt to determine, . 198 Child mortality, its causes, 32 ; in New York City, 32 ; excessive prior to 1875, 55, 56 ; in New- ark, N. J., 55, 130. Child murder for insurance money denied, 179, 206 (see also Ap- proval). Children, insured, mortality of, 218 ; claims paid on, 219. Children, insurance of, early in- stance of, 8 ; first American at- tack on, 10 ; explanation of, 72, 1 20, 179 ; a legitimate business, 120 ; charges against, 128; aver- age amounts of policies, 128, 150 ; parliamentary investiga- tion of, in England, 129 ; attack on, 150, 213 ; expert opinion on, 159; officially approved, 161, 206, 273, 276; agitation on the, 172 ; objects of the, 179 ; attempt to prohibit, 182, 184, 198 ; legislative investiga- tion of, 182 ; legal recognition of, 183 ; perversion of facts as to the, 207 ; premium limit, 226, 227 ; effort to regulate, 272, 273 ; not contrary to public policy, 273, 280; favored by Denver citizens, 279-281 ; ap- proved by Ohio Legislature, 281 (see also Approval). Chronicle, The, on insurance edu- cation, 148; on surrender value of Industrial policies, 171. Civilization and life insurance, . . 318 Claflin, Governor, of Massachu- setts, report on depositors in savings banks, 1870, 25 Ckims, method of paying, The Prudential Friendly Society's, 71, 76, 77 ; immediate payment of, 162, 163, 257 ; amounts of, paid by The Prudential, 1876- 1885, 163; improved method of paying, 257. 322 INDEX. PAGE. Clark, John E., Consulting Actu- ary of The Prudential Friendly Society, 61 ; actuarial data of, 77 ; on surrender values, 87. Clark-Dryden correspondence, . . 61 Clarke, Julius B., advocates Indus- trial insurance in Massachu- setts, 48 Class insurance, in 1859, 13; by Ordinary companies, 105. Class of people insured, in The Prudential, . . 194, 301, 302, 303 Clerical force of The Prudential, 1885-1900, 300 Coal-miners, native, accepted by The Prudential, 246 Code, telegraphic, for claim pay- ments, 258 Collector, a necessity in Industrial insurance, 261,262 Collins, J. B., on life insurance vs. savings banks, n Collins, J. F., 117 ; death of, 231 ; sketch of, 232. Color line in life insurance (see Negroes), 137 Colorado, insurance of children prohibited in, 198 ; law of 1893 unconstitutional, 208 ; Insur- ance Department of, on Indus- trial insurance, 199, 208 ; effort to repeal law of 1893, 272 ; In- surance Commissioner of, on Industrial insurance, 276; Leg- islature of, in favor of Indus- trial insurance, 281 ; attempt to repeal the law of 1893, a failure, 281. Companies, organization of new Industrial 100 Competition, evil effects of, ex- cessive 133, 146, 181, 184 Complaints, rarity of, against In- dustrial insurance, . . . 135, 152 Concessions, to policy-holders, made by The Prudential, 154, 187, 195-197. 214, 215, 227, PAGE. 228, 235-238, 312, 313 ; made retroactive, 237 ; expected re- sult of, 238 ; cost of Prudential, 239. 3 J 3 J review of, 248, 249. Confidence, public, in The Pru- dential, 253, 314 Connecticut, Insurance Commis- sioner of, on Industrial insur- . ance, 160, 223, 275 Conservative policy of The Pru- dential, 158 Consumption clause, in the Pru- dential policy, 155 ; removed, 229. Contract, the Industrial, of The Prudential 312 Co-operation, R. T. Ely on, 18 ; Herbert Spencer on, 18. Co-operative insurance associa- tions, based on false principles, 19 ; frequency of failure of, 33. Co-operative insurance, fallacies of, 1 8 ; determining features of, 27 ; condemned, 33 ; vs. Industrial insurance, 51, 131, 143- Cost, in Industrial insurance, dis- cussion of, 50 ; of Prudential concessions, 1886-1900, 313. Customs, ancient origin of pres- ent-day, 4 Deaths, thirty principal causes of, in the Prudential's experience, 1891-1898, 310 Debit, definition of, 269 Definition of Industrial insurance, 3 ; of life insurance, 34 ; of debit, 269. Demand for Industrial insurance, 35. 37. 42, 50, 51. 53, 84, 85, 92, 96, 98, no, in, 178, 253, 286. Demolins, E., on thrift 4 Denver citizens on Industrial in- surance 279-281 INDEX. 323 PAGE. Denver Times on Industrial in- surance, 199, 200 Devine, E. T., on morals and eco- nomics, ... 286 Disbursements to Prudential policy-holders, 1876-1899, . 297 Diseases, excessive prevalence of, previous to 1875, 55 ; mortality from principal, in The Pru- dential, 310, 311. Discrimination against negroes, laws prohibiting, 153, 159, 185 (see also Negroes). Dividends, on Special Adult poli- cies, 182, 215 ; cash, after fif- teen years, 237 ; cash, method of payment of, 261. Drake, W. R., first applicant to The Prudential Friendly So- ciety, 58, 79 Dryden, Forrest F., elected Secre- tary of The Prudential, ... 183 Dryden, John F., founder of The Prudential, I ; student of in- surance problems, 52, 57 ; vis- its Newark, 1873, 56 ; and the Widows' and Orphans' Friend- ly Society, 57, no; influence on, of Gladstone and Wright, 57 , knowledge of insurance principles, 60 ; correspondence with J. E. Clark, 61 ; courage and energy of, 68 ; elected President of The Prudential, 70, 145 ; visit to England, 94 ; Spectator on, 115, 145; on first infantile rate table, 121 ; circular on lapses, 124 ; on Im- mediate Benefit Concession to policy-holders, 125 ; on life insurance of negroes, 137 ; on expense-rate, 139 ; on lapse question, 139 ; on Prudential history, 156 ; on Prudential progress, 166, 248, 249 ; tribute to, no, 167; on Industrial in- surance as an educator, 193, PAGE. 194; on the panic of 1893, 195 ; argument before the Colorado Legislature, 198, 199 ; on insurable interest, 198, 199 ; statement before the Insurance Committee of Mas- sachusetts, 218, 219, 222; ad- dress of, 1896, 230 ; on Indus- trial-Ordinary insurance, 230 ; Presidential elector, 230; letter on concessions, 235-238; on Prudential agents, 242 ; on revivals, 242, 243 ; address by, at Prudential banquet, 1898, 252, 253 ; letter on war risks, 254, 255 ; letter to the field force, 265 ; tribute to Superin- tendent Egenolf, 282 ; tribute to Superintendent W. F. Law- son, 283 ; recognition of social forces, 317 ; address of, January 10, 1900, 318. Duty, life insurance as a, .... 13 Dykeman, C. V., Superintendent, anniversary of 283 Economic aspects of Industrial in- surance, 68, 198, 284, 286, 287, 3i5, 3 l6 - Eddy, H. H., Insurance Commis- sioner of Colorado, 273 Educational value of Industrial insurance, 13, 14, 45, 105, 148, 178, 190, 191, 193, 194. Egenolf, P., Superintendent, an- niversary of, 282 Eichbauer, Frederick, death of, . 232 Ely, Richard T., on scope of Po- litical Economy, 2 ; on co- operation, 18; on charitable institutions, 41 ; on life insur- ance, 284. Emigration, English, influence of, on American Industrial insur- ance 33 324 INDEX. PAGE. Employees, insurance of Mont- gomery Ward & Co.'s, in The Prudential, 268 ; insurance of Ithaca Daily News' , in The Pru- dential, 268. Employees, Prudential, number of, 156; in 1886, 167; 1885- 1900, 300. Endowment policies, Industrial, issued by The Prudential, 189 ; for children, explained, 192, 193. England, surrender value in, . . 296 English, Stephen, on Industrial insurance, 31 ; reply to Elizur Wright, 47 (see Insurance Times). Entz, J. F., on mass insurance, 23, 24 ; organized the Progress L,if e and Savings Insurance Co., 24 ; on family insurance, 24. Equity, the basis of the Pruden- tial contract, 88 ; evidence of Prudential, 228; the underly- ing principle of The Pruden- tial, 253. Evans, J. C., Colorado State Sen- ator, on Industrial insurance, 277 Evolution, in life-insurance methods, 84 ; of the Prudential Industrial policy, 1876-1900, 154, 312 ; of Industrial insur- ance, 164, 165, 314, 318; of Industrial-Ordinary insurance, 259- Examination, official, of The Pru- dential, 204 Exchange and Review, the, on life insurance, 22, 23 ; on the Bund or Union plan of life insurance, 27. Expense-rate in Industrial insur- ance, 50, 62, 139, 140 Experience, necessary for im- proved tables, 61 ; the guide of The Prudential, 239. Experiment in the issue of Indus- trial policies, 259, 260 PAGE. Extension, of business operations of The Prudential, 142 ; of in- surance principles to the mas- ses, 159. Extent of Industrial insurance, world-wide 200, 284 Fackler, D. P., examination of the N. J. Mutual by, 99 ; examina- tion of The Prudential, 118; on Industrial insurance, 223, 224. Fallacies, life insurance, 17 Familien Schutz, Bund plan of in- surance, 29 Family Bank plan of insurance, advocated by Elizur Wright, 43 ; failure of, 44. Family insurance, need of, 24, 306 ; Insurance Commissioner Clarke, of Massachusetts, on, 49; approved, 85; demand for, 86 ; official approval of, 152, 275. Farr's English Life Table com- pared with Prudential's expe- rience, 218 Financial condition of The Pru- dential, in 1879, n8; New Jer- sey official report on, 204 ; sta- tistics of, 298, 299. Financial value of Prudential's concessions, 313 Five-Hundred-Dollar Adult Rate Table, first, 126 Foreign-born Industrial policy- holders in The Prudential, . . 302 Fortuna Life Insurance Society, The, 28 Foundation, solid, of The Pruden- tial, 267 Fraternal insurance vs. Industrial insurance, 143 Fraternal Orders, inherent defects of, 7 ; membership, 106 ; fal- lacies of, 131. INDEX. 325 PAGE. Friendly Society, an American, . HI Friendly Societies, early, 5 ; Roy- al Commission on, 30, 34; fre- quency of failure of, 33; and Industrial insurance, 48, 49 ; and American Industrial insur- ance companies, 50; Neison and RatclifFe on, 60 ; in 1875, 78. Fuel Saving Society of Philadel- phia, 8 Funeral insurance, Walford on, . 35 Funeral insurance companies, 35, 174 Funeral rites, importance of, . . 4 Funerals, extravagance of, 1875, 66 ; expenses of, first object of Industrial insurance, 76 ; cost of, in Newark and New York, 219, 220. Germania Life Insurance Co., In- dustrial business of the, . . .161 Germans, Industrial insurance ap- proved by, 143 ; as insurance risks, 302, 303. Germany, Industrial insurance in, 303 Gibraltar, rock of, .... 58, 119, 267 Gilds, of the middle ages, 5 ; destruction of, by Henry VIII., 5. Gladstone, on post-office insur- ance, 16 ; attack of, on the British Prudential, 46. Government insurance, ... 16, 35 Greene, Jacob L. , on the first duty of a life company, 296 Guizot, criticism of English thought, 2 Gummere, on early importance of funeral rites, 4 H Hadley, A. T., on individual responsibility, 221 Hadley, H. H., and the Peabody Life, 36 ; experiments in life insurance, 36 PAGE. Haggart, Thos., death of, .... 247 Hahne & Co., Newark, N. J., part- nership insurance of, in The Prudential, 262 Harnill, Dr. Edward H., on de- clined risks, 200 Harben, Henry, testimony before the Royal Commission, 30; on agitation for Industrial in- surance in America, 30 ; on the history of the British Pruden- tial, 30 ; reply to Elizur Wright, 46 ; defends the British Pru- dential, 47 ; on sickness insur- ance, 95 ; on mortality expe- rience of British Prudential, 129. Harvey, Augustus F., on Indus- trial insurance, 158 Hauck, Jacob, on Industrial insur- ance, 279, 280 Hawes, Dr. Edwin, on Industrial insurance, 216 Health insurance, in 1845, 9 ; fail- ure of, 9 ; fallacies of, 17 ; at- tempt to organize, by Pruden- tial Friendly Society, 61, 62, 63 (see also Sickness insurance). Henry VIII., destruction of Gilds by, 5 Hildise Bund, of the Metropolitan Life Insurance Company, 28 ; a failure, 106 ; cumbrous meth- od of, 146. Hilfinnoth, Bund plan of insur- ance, ..." 29 Hobart, Garret A., on Industrial insurance, 96 Hodgkins, Dr., on benefit socie- ties, 131 Hoffman, F. L., on negro mor- tality, 139 Hoi way, D. N., on the science of life insurance, 27 ; on Indus- trial insurance, 190. 326 INDEX. PAGE. Home office of The Prudential, 100, 147, 176; occupation of new, 191, 192 ; preparation to enlarge, 281, 282. Honesty of agents, evidence of, . 252 Hunt's Merchants' Magazine, on Industrial insurance, 9 ; on life insurance vs. savings banks, n. Illinois, Insurance Superintend- ent of, on Industrial insurance, 274 ; murder of insured chil- dren unknown in, 274. Imitations, fraudulent, of Indus- trial companies, 23 Immediate benefit, problem of, 124 ; change in, by Prudential, 154 ; provisions of The Pru- dential, 202 ; under Industrial policies, 215. Improvement in the Prudential policy, 1876-1900, 312 Income, premium, of The Pru- dential 1876-1899, 291 ; total, of The Prudential, 1876-1899, 292. Incontestability, after six months, attempt to obtain, in Illinois, 184 ; of Industrial policies, after two years, 214. Independent, New York, on The Prudential, 213 Indicator, on negro life insurance, 209 ; on The Prudential, 231. Industrial, explanation of the term, 3, 160, 161 Industrial and Commercial, Ham- ilton, Ont., 59, 60 Industrial and General, The, first English Industrial company, 3; founded, 1849, 5 J description of, 9. Industrial companies, fraudulent imitations of, 23 ; early effort to organize, 22 ; reasons for PAGE. the success of, 49 ; Govern- ment aid in organization of, 51 ; organization of, a public duty, 54. Industrial depression, effect of, on Industrial insurance, . . . 155 Industrial insurance, compared with Ordinary insurance, 3, 485 ; defined, 3 ; objects of, 4, 287 ; educational aspect of, 13. 14. 45. I0 5, 148, 178, 190. 191, 193, 194; demand for, 35, 37, 42, 50, 5i. 53. 84, 85, 92, 96, 98, no, in, 178, 253, 286 ; and public policy, 45, 113; principles of, partly recog- nized, 8 ; first reference to, in America, 9 ; early opposition to, 15 ; public confidence in, 15 ; early recognition of the value of, 23 ; principles of, recognized by 1870, 24 ; influenced by English emigration, 33; growth of sentiment in favor of, 34 ; early development distinct from Ordinary companies, 39 ; in the United States, beginning f , 39 > superior to savings banks, 43 ; various opinions on, 44 ; considered impracticable in 1874, 45 ; attacked by Elizur Wright, 46; method of, ex- plained, 48 ; conditions favor- ing, 56; founders of,in America, 58, 63 ; attempted in Canada, 59, 60 ; and funeral extrava- gance, 66 ; early difficulties of, 68; actuarial basis of, 61, 62, 75, 76, 77; simplicity of, 76; equity of system, 76 ; English origin of, 78 ; in force in the United States, 1879, 116; offi- cially recognized in Massachu- setts, 119, 1 20 ; is not a charity, 34, 144, 203 ; in Massachusetts, significant approval of, 222 ; " the wonder of the age," 247 ; INDEX. 327 PAGE not a manufacture, but a growth, 286 ; in force in The Prudential, 1876-1899, 288 ; the highest development of life insurance, 318 (see also Moral aspect, Social aspect, Approval, and Value). Industrial insurance company, first, in England, 3 ; first effort to organize, in America, 21. Industrial Life Insurance Co. of New York, the, attempt at or- ganization, ... .... 22 Industrial Insurance Co. of the United States, 114 Industrial Insurance Co. of Amer- ica, a fraud, 173 Industrial insurance societies, fraudulent, 89, 93, 173 Industrial-Ordinary insurance, 127, 165, 191, 194, 230, 231. Industrial-Ordinary lapse release, 259 Industrial-Ordinary policy, differ- ent from Ordinary, 290 Industrial policies, increasing in amount, 289 ; average amount of Prudential, 289. Industrialism, Lecky on, . . . . 315 Infantile applications, not indica- tive of adverse selection, . . . 81 Infantile rate table, Prudential Friendly Society, 72 ; 1879, 108, 121 ; 1896, 225. Influenza, epidemic of, 183 Instructions, Agents' Manual of, . 240 Insurable interest defined, 49, 161, 179, 198, 199. Insurance and Commercial Maga- zine on Industrial insurance, . 147 Insurance Commissioners, special committee of, on Industrial insurance, 122 Insurance Critic, on real estate purchase, of The Prudential, 176, 177; on The Prudential, 233. 234- PAGE. Insurance enterprises, fraudulent, in 1868, 18 Insurance Herald, on statement of Mr. J. F. Dryden, ..... 222 Insurance in force in The Pruden- tial, December 31, 1876, 93 ; 1877, 99 I 1878, 108 ; 1879, 116 ; 1880, 132; 1881, 142; 1882, 146, 147; 1883, 151; 1884, 153, 154, 155; 1885, 159; 1886, 166; 1887, 169 ; 1888, 175 ; 1889, 181 ; 1890, 184; 1891, 185, 186; 1892, 191 ; 1894, 202, 203, 212; 1895, 224; 1897, 247 ; 1898, 264 ; 1899, 283. Insurance Journal, New York, on The Prudential, .... 196, 197 Insurance Times, on Health in- surance fallacies, 17 ; on Indus- trial insurance, 31, 32, 34, 39, 112, 131; in 1874, 45; in 1875, 67; in 1879, IIJ ; on Elizur Wright, 44; on Insurance Commissioner Clarke's report, 52 ; reasons for favoring In- dustrial insurance, 53, 54 ; on funeral extravagance, 66 ; on taxation of life insurance, 256. Insurance World, on Industrial insurance, 60, 102 ; recognizes necessity of Industrial insur- ance, no; on The Prudential, 118 ; on surrender value of In- dustrial policies, 170, 171. intemperance clause in the Pru- dential policy, eliminated, . . 155 Intermediate insurance, 105 ; of The Prudential, 245. nternational Life of London, re- insurance of, 29 nvestment features of Industrial insurance, 290 nvestments, analysis of Pruden- tial, . . . , 299 ssue of new business by The Prudential, 1876-1899, .... 293 328 INDEX. PAGE. Issue, weekly Industrial, of The Prudential, 300 ; weekly Ordi- nary, of The Prudential, 300. Ithaca Daily News, Industrial in- surance of employees, . . 268, 269 Jersey City Journal on Industrial insurance, 97 John Hancock Mutual Life, Pru- dential branch of, 101 ; com- mences Industrial insurance, US- Johnson, A. B., attack on life in- surance, 10 Jones, Hugh R., on insurance of children, 223 Keyes, E. W., savings bank plan of insurance, 36 Laboring Men's Life Insurance Co., Chicago, 111., 20 Labor problems vs. Industrial In- surance, 284 Labor-Term insurance, 36 Lapsed policy-holders, treatment of, 296 Lapses, circular on, 123 ; efforts made to prevent, 123, 180, 195, 196, 225, 244, 251, 252, 265, 280 ; official opinion on the question f *35 > a l ss to the company, 139, 141, 294; in Industrial in- surance, 139, 171, 179, 197, 198, 296 ; Weekly Underwriter on question of, 141 ; misconcep- tion as to importance of, 142, 212 ; consideration of question of, 212 ; reduction of, 238 ; a serious problem, 252. Lawson, W. F., Superintendent, anniversary of, 283 Lecky, W. E. H., on public opinion, 222 ; on conduct and PAGE. progress, 287 ; on Industrial- ism, 315. Legislation, evils of, in dealing with life insurance, 41; neces- sity of restrictive, 135 ; Her- bert Spencer on ill-advised, 317 ; adverse, attempts at (see Children, Negroes, Surrender value). Liabilities, of The Prudential, 1877-1899, 298 ; analysis of The Prudential, 299. Liberality, and equity of The Prudential, 195, 239. License fees of Industrial agents, 136 Lien provision of Industrial poli- cies 243 Liens, form of Industrial policy, 243 Life insurance, mass vs. class, 3 ; for the masses, 8, n, 12, 17, 21, 2 3 76, 77 ; vs. savings banks, 10, 11,25,42,43,285; ignorance of the principles of, n ; for small amounts, 12, 16 ; for the poor, 13, 23, 41, 64, 102, in, 112 ; as a duty, 13 ; and educa- tion (see Educational value) ; in 1860, 13 ; lack of confidence in the principles of, 15 ; ten- dency of, in 1864, 16 ; in 1868, 20 ; moral obligation of, 21 ; scientific principles of, 27 ; Bund or Union plan of, 28, 29, 89, 102 ; new departure in, 30 ; not philanthropy, 34, 41, 144, 203 ; definition of, 34 ; secur- ity, the first element in, 34, 50 ; savings bank plan of, 36 ; for the poor, defined, 41 ; nature of, 41 ; attacked by Elizur Wright, 43 ; for those who need it most, 67. Life Insurance Association of America, Bund plan of, ... 29 Life Insurance Co. of Virginia, . 168 Limit of insurance, Prudential Friendly Society, 70 INDEX. 329 PAGE. Loans on Industrial policies, 243, 244 Loyalty of the Prudential force, 282 M McDermott, Thos. L-, on Indus- trial insurance, .... 216, 217 Mackay, T., on tendency of wage-earners towards econom- ic independence, 190, 191 ; on Industrial insurance, 221. Maine, explosion of the U. S. S., 253 ; Prudential policy-holders lost in the explosion of the, 254. Malone, Rev. T. H., on Industrial insurance, 277 Management of The Prudential, efficiency of the, 155 Management of agents, . . 270, 271 Manchester Order of Unity, ... 60 Manhattan Co-operative Relief Association, 18, 19 Masses, life insurance for the, 8, n, 12, 17, 21, 23, 76, 77. Mass insurance, vs. class insur- ance, 3 ; by The Prudential, 179. Massachusetts, attempt to prohibit insurance of children in, 217 ; failure of attempt to prohibit insurance of children in, 221 ; efforts at adverse legislation in, 229, 230 ; Deputy Insurance Commissioner of, on Indus- trial insurance, 275. Massachusetts Insurance Commis- sioner, on negro discrimina- tion, 153 ; on Industrial insur- ance, 48, 160, 161, 180. Massachusetts Insurance Report, of 1874, on Industrial insur- ance, 48, in ; on Industrial in- insurance in 1880, 119. Massachusetts Labor Commission on savings bank depositors, . . 25 Massachusetts Labor Report, on life insurance, 1875, 65 ; on charity, in. PAGE. Massachusetts S. P. C. C., opposi- tion to insurance of children, 217 ; change of views on the insurance of children, 217. Maternal instinct, among working women, 128 ; among the poor, 279, 280. Medical Director, instructions is- sued by The Prudential, . . . 240 Medical examinations, in Indus- trial insurance, 201, 202 ; on revivals, 244 ; ratio of, to rejec- tions, 309. Medical inspection, 239, 240 Medical statistics of The Pruden- tial, 309, 312 Methods of transacting Industrial business, 240, 241 Metropolitan Life Insurance Co., Bund plan of, 28, 102 ; com- mences Industrial insurance, 116; progress of, 132; exami- nation of, 205. Metuchen Inquirer on The Pru- dential, 134 ; on Prudential progress, 177. Military service, no extra charge for, 255 Mill, J. S., on taxation of life in- surance, 256 Miners' and Mechanics' Life In- surance Co., 20 Minors, life insurance of (see Chil- dren). Minority, Colorado House Bill No. 317 defeated by a small, . . . 281 Misrepresentation of Industrial in- surance, 200 Missouri Valley Life, insurance scheme of, 36 ; insurance plan of, and failure, 37. Monitor, Insurance, on life insur- ance for the poor, 13 ; on Gov- ernment insurance, 16 ; on tendency of life insurance in 1864, 16 ; on life-insurance fallacies, 17 ; on insurance for 330 INDEX. PAGE. the masses, 17, 21 ; on The Pru- dential Friendly Society, 78 ; on Industrial insurance, 105 ; on the Bund plan in life insurance, 106 ; on the progress of The Prudential, 117 ; on Prudential liberality, 187, 188 ; on surren- der value law of 1895, 214 ; on Industrial rates, 226 ; on the success of The Prudential, 266. Monthly premium payment plan, of Mutual Benefit of Newark, 21 ; advocated, 32 ; inadequacy of, 32 ; endorsed by the Insur- ance Times, 40; of the John Hancock Mutual, 101. Moon, J., on Industrial insurance, 223 Moral aspect of Industrial insur- ance, 21, 68, 91, 113, 234 Morgan, Nathan D., on Industrial insurance in 1874, 44, 45 Mortality of children, 32 ; exces- sive, as explaining the demand for Industrial insurance, 32 ; of New York City, excessive dur- ing 1870-1872, 32 ; excessive in American cities previous to J 875, 55 ; statistics of negro population, 138; comparative, of children and adults, 220 ; by age and sex, in Prudential ex- perience, 311. Mortality experience, investiga- tion into Prudential, 159 ; of children insured in The Pru- dential compared with Farr's Table, 218; The Prudential, 1891-1898, 310, 311. Motto of The Prudential, .... 225 Mowatt, James A., on Industrial insurance, 46 Murder of children for insurance money, not proven, 128, 129 ; unknown, 150, 152, 207, 208, 217, 274, 276 ; denied, 150, 223. Mutual Benefit Life Insurance Co., Newark, N. J., effort to estab- PAGE. lish weekly premium pay- ments in 1847, 8 N National character of Industrial insurance, 303, 307 Nationality of Industrial policy- holders in The Prudential, . 302 Necessity, Industrial insurance a, 134 Neglect of insured children prac- tically unknown, . . 207, 217, 223 Negroes, insurance of, 137, 185, 208, 209, 21 1 ; first Pruden- tial adult rate table for, 138; discrimination against, pro- hibited in Massachusetts, 153 ; in Rhode Island, 159 ; in New York, 185 ; discrimination against, 207 ; excessive mor- tality of, 137, 209, 302 ; mortal- ity of, in Prudential experi- ence, 210 ; not solicited by The Prudential, 211; Leslie D. Ward on insurance of, 209-211. NeisonandJ. F. Dryden, .... 60 Newark Daily Advertiser on The Prudential, 74, 75, 90, 91 Newark Daily Journal on The Prudential, 147 Newark Evening Courier on The Prudential Friendly Society, 58, 75, 76. Newark Morning Register on The Prudential Friendly Society, 58 ; on Industrial insurance, 76, 77 ; on The Prudential, 144, 267. Newark, N. J., birthplace of In- dustrial insurance, 56 ; pauper- ism in, previous to 1875, 5^ > a favorable field to organize an Industrial company, 78 ; mor- tality of children in, 130 ; be- neficent results of Industrial insurance in, 307 ; decrease in pauper burials in, 307 ; large proportion of industrial popu- lation insured, 307. INDEX. 33 1 PAGE. Newark Sunday Call, on The Pru- dential Friendly Society, 85, 86 ; on The Prudential, 133, 134. New Era in Industrial insurance, 187, 235. New Hampshire Insurance Com- missioner on Industrial insur- ance, 263 New insurance, explanation of, 212 ; issued by The Prudential, 1876-1899, 293 New Jersey, attempts at adverse legislation in, 184 ; law prohib- iting discrimination against negroes, 208, 209; surrender value question in, 211, 212 ; surrender value law of, 214 ; Insurance Commissioner of, on Industrial insurance, 273, 274. New Jersey Mutual, failure of the, 98 Newspaper attacks on Industrial insurance, . . . 150, 199, 200, 277 New York City, excessive mor- tality in, 32'; pauper burials in, 32, 56 ; infant mortality in, 312. New York Insurance Department on Industrial insurance, 205, 274 New York Insurance Report, on industrial depression, 155 ; on Industrial insurance, 134, 135, 151, 155- New York Life Insurance Co., Union plan of, 27, 28, 29 ; offi- cers of the, attempt Industrial insurance, 114. New York Life Insurance and Trust Co. , insurance for small sums by the, 12 New York State, Prudential en- ters, 117 ; insurance license question in, 136 ; attempt to prohibit the insurance of per- sons under ten years in, 182 ; Insurance Superintendent of, on Industrial insurance, 274 ; murder of insured children unknown in, 274. PAGE. New York Workingmen's Bene- fit Co., 20 Non-forfeiture, law not applicable to Industrial insurance, 122 ; in Industrial insurance, 164, 165 (see Surrender value, Lapses, Paid-up insurance). Notification law not applicable to Industrial insurance, 122 O Objects of Industrial insurance, 4, 287, 316. Occupation, of first male appli- cants to The Prudential Friend- ly Society, 80 ; restrictions re- moved, 155 ; restrictions on, 245, 246 ; of Prudential Indus- trial policy-holders (male), 304, 305 ; of Prudential Industrial policy-holders (female), 306; dangerous, of Industrial pol- icy-holders, 310. Odd Fellows in America, .... 8 Office force of The Prudential, 1885-1900, 300 Ohio, Insurance Superintendent of, on Industrial insurance, 171, 274 Ohio, murder of insured children unknown in, 274 ; attempts to prohibit the insurance of chil- dren under 12 years defeated in, 281. Old Guard, Prudential, explana- tion of, 177 ; privileges of, 241 ; membership in, .282. Opposition to Industrial insur- ance, early, 15 ; reasons for, 141 ; character of, 150 ; a class sen- timent, 278 (see Approval). Orange Journal, N. J., on value of Industrial insurance, .... 308 Ordinary-Industrial insurance, 127, 165, 191, 194, 230, 231. Ordinary insurance, vs. Industrial insurance, 3, 285 ; attacks on, 10, 26 ; by Industrial com- panies, 165 ; commenced by 332 INDEX. The Prudential, 165 ; in force in The Prudential, 1886-1899, 288 ; proportion of total busi- ness, 290. Ordinary policies, average amount of Prudential, 289 Origin of Industrial insurance, 78, 318 "Our American Union" on life insurance, 10 Paid-up Industrial insurance, 211, 212, 214, 237; misstatement about, by University Settle- ment Society, 213 ; explained, 187, 188 ; granted by The Pru- dential, 265 ; 1890-1899, 295. Panic and depression, of iS73~'78, effect on Industrial insurance, 68 ; of 1893, effect of, 195 ; effect of, on life insurance, 203. Partnership insurance by The Pru- dential, 262 Paterson Guardian on Industrial insurance, 97 Paterson Press on The Pruden- tial, ... 142, 143 Pauper burials, the abhorrence of, 4 ; in New York City, 32 ; and Industrial insurance, 147, 148 ; decrease in, 307, 308 ; table of, for ten American cities, iSSo- 1899, 308. Pauperism , in Massachusetts, 1875 , 65; insurance against, 114; and Industrial insurance, 147, 148 ; prevented by Industrial insur- ance, 280; in American cities previous to 1875, 56. Paupers, life insurance of, un- profitable and impracticable, .112 Peabody Life, savings bank plan of insurance, 36 ; weekly pre- mium payment plan of, 36. Peacock, Mr., effort of, to organ- ize an Industrial company, . 21, 22 PAGE. Pennsylvania, attempt to prohibit insurance of children in, 172 ; Insurance Commissioner of, on Industrial insurance, 275 ; murder of insured children unknown in, 275. Pennsylvania Co. for Insurance of Lives, 8 Pensions, industrial, old age, im- practicable, 73 People's Life Insurance Co. of New York City, ...... 20 People's Insurance Co. of Nor- wich, Conn., 168 Peto, Sir S. Morton, on taxation of life insurance, 256 Philadelphia Charity Organization Society on Industrial insur- ance, 172 Philadelphia Intelligencer on paid-up Industrial policies, 188, 189 Philanthropy, insurance is not, 34, 144, 203. Piedmont and Arlington Life In- surance Co., connection with the Widows' and Orphans' Friendly Society, 38 Pittsburg Dispatch on Industrial insurance, 149 Platt, Sarah S., on Industrial in- surance, ........ 276, 277 Police, chief of, on Industrial in- surance in Louisville, . . . 217 Policemen's Insurance Fund, in New York City 17 Policy, return of, if not satisfac- tory, 228 ; new, of The Pruden- tial, 236, 237 ; average amount of Industrial and Ordinary, 289- Political economy and Industrial insurance, 2 (see also Eco- nomic aspects). Poor, life insurance for the, 13, 23, 41, 64, 102, in, 112. "Poor man's friend," The Pru- dential the, 144 INDEX. 333 PAGB. Population, sex distribution of, insured in The Prudential, . . 306 Post-office insurance 16 Poverty and pauperism, difference between, 73, 112 Premium payment plans, 8, 21, 27, 32, 3 6 . 40. Premium payments, methods of, Prudential Friendly Society, . 70 Premium Rates of Industrial Com- panies, discussion of, 50 Premiums, weekly, first applied in life insurance, 8; paid out of luxuries, not necessities, 73; weekly payment of, preferred, 82 ; unpaid portion of annual, deducted from claim, 124 ; re- turn of first two weeks', if pol- icy is not satisfactory, 228 ; limit of, in insurance of chil- dren, 226, 227 ; income of The Prudential, 1876-1899, 291. Principles, life insurance, igno- rance of, ii ; life insurance, lack of confidence in, 15 ; Pru- dential foundation, 176 ; busi- ness, of The Prudential, 253. Printing and Supply Departments of The Prudential, 301 Privileges of the Prudential Old Guard, 241 Problem, The Prudential solves the insurance, .... 144, 146 Profit-sharing policies, Industrial, 242 Progress Life and Savings Insur- ance Co. of the United States, 24 Progress of The Prudential Insur- ance Co. (see Insurance in force). Propinquity of Industrial insur- ance, 102 Provident Savings Assurance So- ciety, attempt to transact busi- ness without agents, 65 ; com- menced Industrial insurance, 114; discontinued Industrial insurance, 142. PAGB. Pseudo life-insurance companies, 173 Prudential Benefit Society, The, Newark, N. J., 93 Prudential League, Harrisburg, Pa., 89 Prudential, the, of Bngland, model for the American company, i ; and the Industrial and General, 5 ; and the International Life, 29 ; influence of, on American insurance development, 16 ; in 1864, 16 ; in 1868, 21; method of business, 23 ; his- tory of, 30; in 1872, 31; In- surance Times on, 41 ; attacked by Gladstone, 46 ; in 1874, 60 (see Harben, Henry). Prudential Friendly Society, The, organized, 1875, 38 ; in 1875, 57 ; first application to, 58 ; "founded on a rock," 58; founders of, 58, 63 ; organiza- tion difficult, 63 ; first Board of Directors, 69, 85 ; first pros- pectus of, 70 ; medical exam- ination not required, 70 ; rates charged by, 72, 73 ; foundation principles of, 74, 75, 85 ; ob- jects and methods, 71, 74, 75 ; benefits of plan, 76 ; progress of, iu 1875, 79; class of per- sons insured in, 80 ; progress of, 1876, 84, 92, 93 ; approval of plan of, 85, no ; early finan- cial difficulties, 93; title changed to The Prudential In- surance Co. of America, 95. Prudential Insurance Co. of America, The, Newark, N. J., first American Industrial in- surance company, i ; foun- dation principles of, 63, 64; "founded on a rock," 77; an institution for all, 77 ; ex- tends its operations, 95 ; capi- tal increased, 117 ; name of, a household word, 119; Insur- 334 INDEX. PAGE. ance Times on, 131 ; praise of, 133, 134 ; newspaper attack on, 145 ; tenth anniversary of, 156; public discussion of method of, 166, 167 ; growth of, 176 ; Boston Herald on, 180 ; paid-up policies of, 187 ; grants surrender values, 188, 189 ; insurance in force, 1876- 1899, 288 ; total income of, 1876-1899, 292 ; new business issue, 1876-1899, 293 ; paid-up policy issue, 1890-1899, 295 ; payments to policy-holders, 1876-1899, 297 ; surplus of, 1876-1899, 298 ; assets of, 1876- 1899, 298 ; liabilities of, 1877- 1899, 298. Prudential Insurance Co. of Amer- ica, New York City, . . .52 Prudential Life Insurance Co., Columbus, Ohio, 34 Prudential Mutual Aid, Harris- burg, Pa., 90 Prudential Weekly Record, The, on the Rock of Gibraltar, 267 ; published for the field force, 301. Public charity and Industrial in- surance, 113 Public policy and Industrial in- surance, 45, 113 RatcliffeandJ. F. Dryden, ... 60 Rates, premium, relation of mor- tality to, 109 ; change in Pru- dential, October 6, 1884, 154 ; January 4, 1886, 164 ; in 1890, 184 ; in 1896, 225. Rate tables, first adult, Prudential Friendly Society, 71 ; first in- fantile, Prudential Friendly So- ciety, 72 ; Prudential infantile, 1879, 108 ; Prudential adult, 1879, 109 ; first infantile, Pru- dential Insurance Co., 121 ; PAGE, Five -Hundred Dollar, adult, 126 ; Prudential, for colored risks, 138; Child's Endowment, 193 ; Prudential infantile, 1896, 225 ; Prudential adult, 1896, 228 ; Prudential intermediate, 246. Real estate, purchase of, for Pru- dential office building, . . 175, 176 Receipt books, cost of, assumed by The Prudential, 260 Reese, Dr. R. M., on insurance education, 13 Regulation, statutory, of Indus- trial insurance, 183 Regulating statute, efforts in Colorado to pass a, 272 Rejected lives, observation on, 200 Rejections, medical, in Pruden- tial Industrial and Ordinary Departments, 309 Relief and Aid Society, Chicago, 290 Religious press on Manhattan Co- operative Relief Association, . 19 Reserve, required on Industrial policies, 119 ; on infantile policies, 120; on Industrial policies, discussion on, 151. Retail principle in life insurance, 105 Revival privileges of Industrial policy-holders, 89, 124, 195, 196, 242, 243. Reynolds, Dr. F. S., on Industrial insurance, . . 217 Rhodes's United States Advertiser on mass insurance, n Ribot, T., on scientific evidence, 315 Risks, Industrial, character of, 82, 83, 302-307. Rochdale, Industrial insurance in, 42 Roman Collegia, the, as insurance associations, 5 Royal Liver Friendly Society, Liverpool, Bug., 60 ; mortality experience of the, 129. INDEX. 335 PAGE. S St. Peter's Workingmen's Benefit Club in Savings, semi-compulsory, by Industrial insurance, 43; sys- tematic, increased by Indus- trial insurance, 309. Savings banks vs. life insurance, 10, n, 25, 42, 43, 59, 285. Savings Bank Commission of Massachusetts, report of 1852, 25 Savings banks depositors of Mas- sachusetts, wealthy, 25, 26; Governor's message on, 25. Saving habits, undeveloped, 25 ; of the masses in 1872, 25 ; de- veloped by Industrial insur- ance, 26, 43, 309. Savings institution,life insurance a, 284 Security the essential principle in life insurance, . . .34, 50, 77, 299 Selection, adverse, in Industrial insurance, 202 Self-solicited insurance for the masses, fallacy of, 64, 65 Sentiment as a factor in legislation, 153 Sex distribution, of persons in- sured in The Prudential, 306 ; of decedents, in the Pruden- tial's experience, 311. Shannon, M., on Industrial insur- ance, 205 Sickness, excessive, previous to 1875, 55 ; inadequacy of statis- tics of, 6 1 ; statistics of, 77. Sickness insurance, attempt at, 61, 62, 63 ; discontinued by The Prudential Friendly Society, 62, 95 ; in small demand, 83, loo ; branch of Industrial com- panies, 94 ; why a failure, 94, 95 ; a failure, 108 (see also Health insurance). Small amounts, life insurance for, 12, 104, 105. PAGE. Smith, Heber, on Industrial insur- ance in 1874, 44 Social aspects of Industrial insur- ance, 104, 113, 169, 178, 190, 191, 193, 194, 234, 284, 286, 315, 316. Solvency, of Industrial insurance companies, 132 ; of The Pru- dential, 299. Special Adult policy of The Pru- dential, 164 Spectator, the, on health-insur- ance fallacies, 17 ; criticism of Manhattan Co-operative Relief Association, 19 ; on the British Prudential, 30, 31 ; on Indus- trial insurance, 30, 103, 104, 169; interview with life under- writers, 44, 45 ; on attack on The Prudential, 145 ; on The Prudential, 145, 146, 156; on the insurance of children, 182 ; on anti-discrimination laws, 185 ; on Industrial insurance progress, 203, 204 ; on Indus- trial rates, 226 ; on Industrial - Ordinary insurance, 231. Spencer, Herbert, on Industrial insurance, 2 ; on co-operation, 1 8 ; on credulity and belief, 316 ; on evolutionary tenden- cies, 137 ; on ill-advised legis- lation, 317. Sprague, T. B., on life insurance of children, 129, 159. Sprague, Actuary, Connecticut Insurance Department, on val- uation of Industrial policies, 160 State life insurance a failure, . . 16 State supervision of Industrial companies, 135, 180 Statistical data demanded by Mas- sachusetts agitators, 230 Status, transition from, to con- tract, 6 ; vs. contract, 75. Stock, sale of Prudential, . . 145, 146 INDEX. PAGE. Stokes, Thos. T., on Industrial insurance, 278 Straight canvassing, results of, 250 ; increased efforts at, 269. Success, of Industrial companies in doubt, 103, 105 ; of The Prudential by 1879, 118 ; in In- dustrial insurance, difficulty of, 168 ; of Industrial insurance, evidence of, 173. Suicide clause, in the Prudential policy, 155 ; removed, 229. Sumner, Charles, on taxation of life insurance, 256 Sumner, Professor W. G. , on social duties, 6 ; on charity, 41. Sun Life Insurance Co., The, or- ganized, 183 Supply and Printing Departments of The Prudential, 301 Surplus of The Prudential, 1876- 1899, 298 Surrender value, inexpedient in Industrial insurance, 87,88; of Industrial policies, 87 ; in In- dustrial insurance, 164, 165, 170 ; attempt to pass laws, 170, 211, 212; question discussed, 170, 171, 188, 189, 214, 295, 296; after two years, 184 ; law of New Jersey, 1895, 213, 214; privilege of Industrial policy- holders, 235 ; cash, 237 ; mis- conception of question of, 296. Taxation of life insurance, 113, 256 ; taxes on Industrial and Ordinary policies assumed by the Company, 256 ; taxes paid by The Prudential, 267. Tax-payer, Industrial insurance and the, 307, 308 Temperance and Industrial insur- ance, 241 PAGE. Tennessee, attempts to prohibit insurance of children in, . . .216 "The Prudential," bi-monthly publication, 301 Thornton, George H., 117 Thrift, defined, 4 ; Industrial in- surance encourages, 91, 164, 169, 170; Industrial agents ' teachers of, 148 ; Industrial insurance a modern form of, 287. Tilt, Dr. E. J., on child insurance, 192 Times, New York, on Govern- ment insurance, 16 Trenton True American on child murder and Industrial insur- ance, 128 Tribune, New York, attack on life insurance, 26 ; approval of In- dustrial insurance in 1875, 64 ; on insurance of children, 152 ; on Prudential progress, 169. Tubercular diseases, mortality from, in the Prudential's ex- perience, 310, 311 Tuckett's Insurance Journal on straight canvassing, 12 Twisting of Industrial policies, . . 181 U Undertakers and Burial Insur- ance Co., Richmond, Va., . . 35 Union plan of the New York Life Insurance Co., . . ... 27 Union or Bund plan a failure, 27 (see also Bund plan in life in- surance). United Brethren Mutual Aid, . . 106 United States Funeral Directing Co., a failure, 175 United States Industrial Insur- ance Co., organized in New- ark, N. J., 180 ; reinsurance of, 181. University Settlement Society, unwarranted attack on Indus- trial companies 213 INDEX. 337 PAGE. V Valuation of Industrial poli- cies, 122, 160 Value, of Industrial insurance, 68, 118, 119, 147, 148, 158, 161, 162, 177, 178, 216, 217, 221, 222, 239, 248, 263, 264, 271, 272, 274, 276, 277, 281, 290, 297, 298, 307, 308, 314 ; of Prudential con- cessions to policy-holders, 313. Vaught, Dr. R. L-, on Industrial insurance, 217 Verdict of the masses on Indus- trial insurance, 286, 314 (see also Approval). Vice-President of The Prudential, L. D. Ward elected, 154 Victoria Assurance Society and American life companies, . . . 31 W Waldorf-Astoria, banquet at the, 1898, 252 ; 1900, 318. Walford, Cornelius, on funeral in- surance, 35 Walker, Amasa, on Government insurance, 35 Walker, Francis A., on economic truths for the masses, .... 47 War, mortality experience of The Prudential, 255 ; permits to policy-holders, 255 ; revenue taxes on Industrial policies, 255, 256. Ward, Edgar B., Counsel and Second Vice-President of The Prudential, 69, 127 Ward, L. D., organizer of The Pru- dential Friendly Society, 69; elected Vice-President of The Prudential, 154; executive skill of, 154 ; on negro life insur- ance, 209-211; on straight canvassing, 249-251 ; on claim payments, 257 ; on payment of Industrial dividends, 261 ; on agency management, 270, 271 ; PAGE. tribute to Superintendent Ege- nolf, 282. Washington, D. C., effort to estab- lish Industrial company in, 67 ; Industrial Life Company in, 78. Watchword, Prudential agents', . 252 Webb, Sydney, on Fraternal in- surance, 7 Weekly-payment plan, first ap- plied in life insurance, 8 ; early approval of, 14; of the Amer- ican Popular Life, 21 ; of the New York Life, 27 ; of the Pea- body Life, 36; popularity of, 101 ; early instance of, in. Weekly Underwriter, on life in- surance for children, 128 ; on insurance legislation, 135 ; on State supervision, 135 ; on In- dustrial lapses, 141 ; on Gov. Butler's attack, 149 ; on Indus- trial insurance, 150 ; on The Prudential, 197 ; on Colorado legislation of 1899, 281. Wells, David A., interest in In- dustrial insurance, .... 168 Western and Southern Industrial Insurance Co., ... ... 181 Western New York Life Insur- ance Co., Bund plan of, ... 29 White, Samuel H., on Industrial insurance in 1874, 44 White, Dr. W. P., on Industrial insurance, 217 Whitehead, Hon. John, first appli- cant to Widows' and Orphans' Friendly Society, . . .no Widows' and Orphans' Friendly Society, character of , 37 ; Bund plan of, 38 ; Teutonic character of, 38 ; charter amended, 57 ; John F. Dry den and the, no. Willoughby, W. F., on working- men's insurance, 284 Windsor Hotel fire, 271 Wise, Henry A., on Government insurance ' . 35 338 INDEX. Women, as Industrial agents, 87 ; members of Colorado Legisla- ture in favor of Industrial in- surance, 281. Workingmen's insurance, early efforts at, i, 6 ; by health-insur- ance companies, 17 ; compa- nies, objects of, 20 ; companies in 1868, 20 ; companies, fail- ures of, 20, 101 ; of the New York Life Insurance Co., 27 ; on the Bund or Union plan, 27 ; 1875, 65 ; defined, 284. Workingmen's Life Insurance Co., Chicago, 111., .... Workingmen's Union, New York City, Wright, Elizur, on life-insurance agents, 14 ; on Industrial in- PAGE. | PAGB. surance, 15 ; on post-office in- surance, 16 ; on Government insurance, 16 ; savings bank plan of insurance, 36, 59 ; Family Bank scheme of, 43 ; attacks on life insurance, 43 ; criticism of, by Insurance Times, 44 ; attacks Industrial insurance, 46; misrepresenta- tion of, proven, 47 ; on life insurance for the poor, 64 ; mistakes of, 98, 99. Wright, Mrs. Harriet G. R., ap- proval of Industrial insurance, 281 20 20 Yates, Henry J., elected Treasurer of The Prudential 154 THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW AN INITIAL FINE OF 25 CENTS WILL BE ASSESSED FOR FAILURE TO RETURN THIS BOOK ON THE DATE DUE. THE PENALTY WILL INCREASE TO SO CENTS ON THE FOURTH DAY AND TO $1.OO ON THE SEVENTH DAY OVERDUE. N?V 1493IL 31986 , 14Mar'59JB NOV 1 5 1985 NOV 4. 19655 2 REC'D NOV 4'6b-6PW LOAN DEPT. rarnnsw** REC'D DEC 13^5 -1PM LOAN DEPT. LD 21-100m-7,'33 GENERAL LIBRARY - U.C. 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