LIBRARY 
 
 UNIVERSITY OF CALIFORNIA 
 
 GIFT OF 
 
 Class 
 
 )r V 
 / V 
 
 v 
 
A REVIEW 
 
 OF 
 
 LIFE INSURANCE 
 
 FROM THE DATE OF THE 
 
 FIRST NATIONAL CONVENTION 
 OF INSURANCE OFFICIALS. . . . 
 
 1871-1897. 
 
 AN ADDRESS BY 
 
 JOHN A. McCALL, President 
 
 OF THE 
 
 NEW-YORK LIFE INSURANCE Co. 
 
 BEFORE THE 
 
 TWENTY-EIGHTH NATIONAL CONVENTION. 
 
 Milwaukee, Sept. 13-16, 1898. 
 

....A.... 
 
 Review of Life Insurance 
 
 FROM THE DATE OF THE 
 
 FIRST NATIONAL CONVENTION 
 OF INSURANCE OFFICIALS. 
 
 PRELIMINARY. 
 
 AT the time of the meeting of the First Con- 
 vention of Insurance Officials, in May, 
 1871, American Life Insurance had passed 
 through two distinctive periods, and had nearly 
 reached the end of a third. In the first period 
 life insurance was done almost entirely by 
 proprietary companies, organized primarily for 
 the transaction of fire insurance, banking and 
 trust business. Following this came the period 
 of the early mutuals and other profit-sharing 
 
 3 
 
 
 
companies, doing a life insurance business 
 exclusively. The marked success of these 
 organizations, between 1843 an d 1862, caused 
 a great multiplication of life companies. Life 
 Insurance shared the fate of other industries of 
 the time flourished and grew with them as 
 later it suffered with them. From 1862 to 
 1870 the number of companies reporting to 
 the New York Department increased from 
 eighteen to seventy-one the latter being the 
 highest number ever reported. During the 
 same period the insurance in force and the 
 gross assets increased over ten-fold. In eight 
 years over two hundred and thirty million dol- 
 lars were added to assets, and over eighteen 
 hundred millions to risks in force. 
 
 During this period State supervision in 
 New York became full-fledged. It was begun 
 in a mild form under the Revised Statutes of 
 1828, which required all moneyed corporations 
 thereafter created to make annual reports to 
 the State Comptroller. This provision was 
 continued in the first general Insurance Act of 
 April 10, 1849, and compliance with its re- 
 quirements by foreign companies was made a 
 
 4 
 
condition of their admission to the State. A 
 deposit with the State for the protection of 
 policy-holders was first required by the Act of 
 April 8, 1851, and under this Act the Comp- 
 troller was given authority to make official 
 examinations of companies. This Act also 
 made the possession of a re-insurance fund a 
 necessity, and required a company to be dis- 
 solved if its assets were not sufficient to re- 
 insure its outstanding risks. The general Life 
 and Health Insurance Law of 1853 required 
 the companies to report a classified statement 
 of all policies in force, together with the data 
 necessary for an official valuation of policy 
 liabilities. The Act of April 15, 1859, creat- 
 ing the Insurance Department, made no new 
 requirement of the companies, but transferred 
 to the Superintendent the authority over them 
 formerly exercised by the Comptroller. A 
 standard of solvency was first adopted by law 
 in 1866, the English Life Table No. 3 for 
 Males, with interest at five per cent., being 
 chosen. In 1868 the standard was changed to 
 the American Experience Table, with interest 
 at four and one-half per cent. The first official 
 
 5 
 
valuation of the policy liabilities of all com- 
 panies doing business in the State was made 
 as of December 31, 1869. The second annual 
 valuation, made December 31, 1870, showed 
 seventy-one solvent companies with $2,000,- 
 000,000 of insurance, $269,000,000 in assets 
 and $48,000,000 in surplus. At this time six 
 other States had adopted the New York stand- 
 ard, while four States stood with Massachusetts 
 for the Actuaries' Table, with four per cent, 
 interest ; Iowa had anticipated the financial 
 discussions of our day by adopting a double 
 standard. Such was the condition of the com- 
 panies and such the standards of solvency 
 at the assembling of the First Convention of 
 Insurance Officials in May, 1871. 
 
 THE CONVENTION. 
 
 What were the burning questions of the 
 time may, perhaps, be best judged by noting 
 those which most occupied the attention of the 
 Convention. These were (i) a uniform blank 
 for the use of companies in making their an- 
 nual reports, and the acceptance by each De- 
 partment, within the limits of existing law, of 
 
 6 
 

 the certificates of other Departments, as to valu- 
 ations and assets of home companies; (2) uni- 
 form methods of valuation, including table of 
 mortality and rate of interest; (3) uniform 
 insurance laws, including uniform taxation of 
 life companies ; (4) the best method of dealing 
 with insolvent companies. 
 
 The first of these subjects being within the 
 purview of the Convention, a uniform blank 
 was adopted and recommended to the various 
 Departments. This form was so modified in 
 1875 that reports should present a perfect 
 balance-sheet, and, with slight amendments, it 
 has been continued until the present time. 
 Upon other subjects named the Convention 
 could only make recommendations. The re- 
 port of the Committee on mortality table and 
 interest rate was presented at the October 
 session and fills over 90 printed pages, while 
 the papers, addresses and letters on the sub- 
 ject occupy 150 pages more. All this was in 
 addition to the extended discussions had dur- 
 ing the sittings of the Convention. The 
 American Table of Mortality, with four and 
 one-half per cent, interest, was finally recom- 
 
mended by a vote of 23 to 3.* Judging from 
 the attention it received, this was considered 
 the most important question before the Con- 
 vention. The companies, as a whole, expressed 
 no preference for any particular table of mor- 
 tality or rate of interest ; but, in response to 
 a request of the Convention to lay before it 
 such matters as they deemed of importance to 
 be considered, they urged uniformity in the 
 forms of annual reports, the adoption of the 
 same basis and system in valuations, the in- 
 terchange of certificates of valuation and assets, 
 the deposit of securities in one State only, the 
 appointment of one agent or attorney only in 
 each State for service of process, and uni- 
 formity in taxation. 
 
 A draft of a reciprocal insurance law was 
 reported, discussed and finally recommended 
 to the several States for adoption. A resolu- 
 tion to the effect that it was impolitic to tax 
 life insurance premiums was lost by a vote of 
 13 to 8, and a resolution to the effect that the 
 
 * Mr. William E. Harvey, of Illinois, announced that he was 
 under instructions to vote for the Actuaries' Table unless a unanimous 
 vote could be obtained for some other standard. Report second ses- 
 sion, pp. 216, 220. 
 
 8 
 
tax on premiums should not exceed one and 
 one-half per cent, was adopted by a vote of 13 
 to 10.* The Secretary of the Convention com- 
 piled a table showing the taxes imposed on 
 Life Insurance by the various States and Terri- 
 tories in 1870, and, in order to ascertain whether 
 the former times were better or worse in this 
 respect than the present, I have had made up 
 a table showing what taxes the New- York 
 Life Insurance Company paid in 1897 in each 
 State and Territory of the United States, and 
 what it would have paid in each had the laws 
 been the same as they were in 1870. 
 
 The table shows an increase in taxation by 
 States having tax laws in 1871, of about three- 
 fourths of one per cent, for the same amount 
 of business. In twenty-two States taxes are 
 higher than in 1871, and in seventeen States 
 they are lower. The most striking feature of 
 the table is its inequalities. In twenty-five 
 States and Territories, where the Company 
 had $317,000,000 insurance in force in 1897, 
 it paid $23,000 in taxes ; in twenty-four other 
 States and Territories, where it had $313,000,- 
 
 * Report second session, pp. 183-4. 
 9 
 
ooo insurance in force, it paid $207,000 in 
 taxes. The taxation of Life Insurance cannot 
 be said to be founded on any recognized prin- 
 ciples of equity or of political economy when in 
 one-half of the Union it is taxed nine times as 
 heavily as it is in the other half. 
 
 COMPARATIVE RESULTS OF TAX LAWS IN 1871 AND 1897 ON THE 
 BUSINESS OF THE NEW- YORK LIFE INSURANCE COMPANY. 
 
 STATE 
 OR TERRITORY. 
 
 Total amount 
 paid in 1897, 
 under laws then 
 in force. 
 
 Amount which 
 would have been 
 paid in 1897 on 
 basis of laws 
 current in 1871. 
 
 Insurance in 
 force 
 Dec. 31, 1897. 
 
 Alabama 
 
 $2,840.58 
 991.23 
 1,306.29 
 
 729.85 
 5,231.89 
 306.00 
 402.48 
 1,176.69 
 4,023.56 
 7,370.61 
 97.00 
 1,402.74 
 10,588.58 
 12,806.58 
 256.67 
 I4,2IO.2O 
 3,715-10 
 289.44 
 5,766.05 
 l6,593-84 
 8,539-15 
 5,501.96 
 1,552.00 
 17,882.46 
 2,154.75 
 133.19 
 IOO.OO 
 
 607.68 
 
 $4,776.96 
 
 $6,951,000 
 2,097,000 
 3,183,000 
 20,015,000 
 7,727,000 
 8,471,000 
 778,000 
 3,545,000 
 5,800,000 
 14,609,000 
 3,OO2,OOO 
 51,798,000 
 14,538,000 
 18,188,000 
 7,099,000 
 18,770,000 
 16,508,000 
 
 3.957,000 
 7,463,000 
 26,563,000 
 12,392,000 
 10,238,000 
 8,292,000 
 29,215,000 
 4,862,000 
 7,272,000 
 1,108,000 
 1,888,000 
 
 Arizona 
 
 Arkansas 
 
 2,402.69 
 6,454.66 
 5,088.64 
 5,920.06 
 745^4 
 1,155-94 
 490.00 
 6,28l.6l 
 
 California 
 
 Colorado 
 
 Connecticut 
 
 Delaware 
 
 Dist. of Columbia. 
 Florida . 
 
 Georgia 
 
 Idaho 
 
 Illinois 
 
 2,900.00 
 262.50 
 711.00 
 4,598.52 
 16,289.33 
 7,130.96 
 103.00 
 
 3>9i3- 8 5 
 8,300.72 
 12,795.27 
 
 Indiana 
 
 Iowa 
 
 Kansas . 
 
 Kentucky 
 
 Louisiana 
 
 Maine . 
 
 Maryland 
 
 Massachusetts 
 Michigan 
 
 Minnesota 
 
 Mississippi 
 
 2,082.50 
 500.00 
 
 Missouri 
 
 Montana .... 
 
 Nebraska 
 
 111.19 
 1,137.68 
 487.68 
 
 Nevada 
 
 New Hampshire . . 
 
 IO 
 
COMPARATIVE RESULTS OF TAX LAWS Contimted. 
 
 STATE 
 OR TERRITORY. 
 
 Total amount 
 paid in 1897, 
 under laws then 
 in force. 
 
 Amount which 
 would have been 
 paid in 1897 on 
 basis of laws 
 current in 1871. 
 
 Insurance in 
 force 
 Dec. 31, 1897. 
 
 New Jersey 
 
 $335-oo 
 226.00 
 
 $7,867.70 
 
 $15,754,000 
 3,064,000 
 123,413,000 
 5,489,000 
 1,529,000 
 28,367,000 
 1,136,000 
 3,601,000 
 45,506,000 
 4,171,000 
 
 6,537,000 
 2,833,000 
 7,815,000 
 25,828,000 
 3,456,000 
 4,800,000 
 9,075,000 
 4,545,000 
 3,234,000 
 12,204,000 
 1,425,000 
 
 New Mexico 
 
 New York 
 
 8,675.00 
 1,800.29 
 
 North Carolina . . . 
 North Dakota 
 Ohio 
 
 3,682.58 
 1,310.06 
 23,920.81 
 142.06 
 883.30 
 31,746.29 
 2,752.06 
 5,092.04 
 1,873.62 
 6,132.44 
 10,628.62 
 1,565-63 
 3,810.52 
 
 3*839.37 
 1,813.31 
 2,057.41 
 451.00 
 934.40 
 
 19,519.84 
 
 Oklahoma 
 
 Oregon . 
 
 145.00 
 47,429.43 
 2,861.06 
 205.00 
 
 Pennsylvania. 
 
 Rhode Island 
 South Carolina . . . 
 South Dakota 
 Tennessee 
 
 4,438.86 
 5OO.OO 
 
 Texas . 
 
 Utah 
 
 Vermont 
 
 2.OO 
 
 7,679.76 
 
 Virginia . . . 
 
 AVashin crton 
 
 West Virginia 
 ~W\ scon sin 
 
 1,838.71 
 4O8.OO 
 364-95 
 
 Wyoming 
 
 
 $229,773.09 
 
 $198,376.00 
 
 $630,111,000 
 
 The Committee on Winding Up Insolvent 
 Companies reported a plan, which was laid 
 upon the table until the next year. Speaking 
 of this action Mr. Harvey, of Missouri, who 
 was a member of the Committee, said in a 
 paper read before the Convention of 1890: 
 
 " There was a unanimous conviction that 
 the prospect at that time, under the existing 
 
 ii 
 
inflation of values, had a dangerous aspect, 
 but where or how soon the wrecks were to 
 begin no one dared predict ; and yet no mem- 
 ber, nor the committee to which was given the 
 matter of devising the skeleton of a uniform 
 insurance law for all the States, seemed to 
 think it worth while to suggest immediate leg- 
 islation, under which, if the storm did burst, 
 some of the craft might be saved. In the law 
 which was proposed at the fall session, a sec- 
 tion looking to the possible recovery of an 
 impaired company was incorporated ; but sub- 
 sequent events have shown that its application 
 would have been a remedy to kill, not cure."* 
 The method incorporated in the proposed 
 law differed but little from the method pursued 
 with such disastrous results under the laws of 
 New York in the years immediately following. 
 The method proposed by the Committee had 
 the merit of keeping an insolvent company 
 together, applying the assets on hand to the 
 purchase of paid-up insurance, and devoting 
 all future premiums received to the purchase 
 of new insurance at a rate adjusted to attained 
 
 * Official report, pp. 18, 19. 
 
 12 
 
age. There was really no question before the 
 Convention of such pressing importance as 
 this, and the long debates over tables of mor- 
 tality and rates of interest might well have 
 been spared, if a just and workable measure 
 for saving insolvent companies from the waste 
 of receiverships could have been devised and 
 urged upon the attention of legislators. The 
 " unanimous conviction " of danger spoken of 
 by Mr. Harvey, was well founded. The of- 
 ficial valuations of December 3ist, preceding, 
 showed an impairment of the capital stock 
 of twenty-nine companies by the New York 
 standard, and of thirty-six companies by the 
 Massachusetts rule. Superintendent Miller, of 
 New York, who called the Convention and 
 presided over its deliberations, had made nu- 
 merous examinations of life companies in 1870, 
 and as a result, two New York companies 
 and two British companies had been obliged 
 to cease doing business. The fate that befell 
 policy-holders in these four organizations was 
 typical of that which was in store for those of 
 thirty-two of the thirty-six companies already 
 referred to, as showing an impairment of capital 
 
under the Massachusetts standard one was 
 wound up by a receiver who paid about 25 
 cents on the dollar, while the other three were 
 re-insured in companies that either failed, or 
 were, in turn, re-insured in other companies 
 that failed. 
 
 Before considering the events of the period 
 immediately following 1871, it may be well to 
 glance at some features of the policy contract 
 at this time. All policies contained numerous 
 restrictions upon residence, travel, occupation, 
 habits of life and manner of death, under which 
 a policy might be canceled or become void. 
 There was no incontestable clause. Ordinary 
 Life policies issued prior to about 1868, and 
 all policies issued prior to 1860, contained no 
 non- forfeiture conditions. Dividends in most 
 companies were declared annually, and were 
 generally available in the reduction of annual 
 premiums, or were added to the policies in the 
 form of paid-up insurance. In 1868 the Equi- 
 table had begun the issue of a deferred dividend , 
 policy which was forfeitable for non-payment 
 of premium during its first dividend period, 
 such period being fixed by the time required 
 
for the annual premiums, compounded at ten 
 per cent, per annum, to amount to the face of 
 the policy. In 1870 the Mutual began the 
 issue of policies which were forfeitable for non- 
 payment of premium during the first dividend 
 period of 10, 15 or 20 years. In 1871 the 
 New- York Life began the issue of a lo-year 
 dividend policy which was forfeitable for non- 
 payment of premium during the first dividend 
 period. These policies did not, however, con- 
 tain the options in settlement including cash 
 surrender value afterward incorporated in 
 deferred dividend policies by these and other 
 companies. 
 
 A PERIOD OF DISASTER. 
 
 The nine years immediately following the 
 First Convention must be accounted the most 
 trying period in the history of American Life 
 Insurance. The number of companies which 
 ceased doing business in New York was forty- 
 six. Only four re-insured in companies that 
 remained solvent; only ten others paid their 
 liabilities in full. Receivers' reports are incom- 
 plete, but a careful examination of such as are 
 
 OF THE 
 
 UNIVERSIT 
 
LOSSES IN NEW YORK COMPANIES. 
 
 NAME OF COMPANY. 
 
 Cash 
 Liabilities. 
 
 Cash 
 Dividends. 
 
 Loss to 
 Policy-holders. 
 
 I. Continental 
 
 $4.821 OA8 
 
 $1 344 066 
 
 $3 476 082 
 
 2. Globe 
 
 3 268 821 
 
 I Q2I OO2 
 
 I 34.7 8lQ 
 
 3. Guardian 
 
 I 727 282 
 
 376 080 
 
 I 3^1 IQ3 
 
 4. Knickerbocker 
 
 3 06"? 7o8 
 
 68 1; 344 
 
 *>oj i > i yj 
 
 2 780 364 
 
 5. North America 
 
 2.Q2'?, 82Q 
 
 087,012 
 
 I.Q3C QI7 
 
 6. Security Life and Annuity 
 7. Universal 
 
 2,474,968 
 2 8l2 SQQ 
 
 259,764 
 2OO OOO 
 
 2,215,204 
 2 6l2 tjQQ 
 
 Twelve small companies. 
 
 3,835,642 
 
 1,815,804 
 
 2,019,838 
 
 TOTALS 
 
 $24,020,807 
 
 $7,c8Q,o8i 
 
 $I7,330,Ol6 
 
 
 
 
 
 1. Includes American Tontine, Farmers and Mechanics and Empire Mutual. 
 
 2. Includes Merchants' Life. Dividends include $100,000 of net shortage of $129,550 
 in Expenditures from incomplete receivers' reports. 
 
 3. Includes Amicable, Widows and Orphans Benefit and Mutual Protection 
 (changed to Reserve Mutual), and New York State Life. 
 
 4. Cash Dividends include $75,000 of $109,873 on hand December 31, 1886, and 
 not reported on. 
 
 5. Includes Standard and Government Security. 
 
 7. Liabilities include $1,500,000 for loss in scaling policies in 1878. Receivers' re- 
 ports incomplete; difference between receipts and disbursements, $222,763; 
 dividends estimated. 
 
 LOSSES IN OTHER-STATE COMPANIES. 
 
 NAME OF COMPANY. 
 
 Cash 
 Liabilities. 
 
 Cash 
 Dividends. 
 
 Loss to 
 Policy-holders. 
 
 I. New Jersey Mutual, N. J. 
 2. Piedm't & Arlington, Va. 
 3. Republic 111.. 
 
 $1,006,185 
 822,060 
 I TOO <^OO 
 
 $41,024 
 
 52,384 
 74.6 112 
 
 $965,161 
 769,676 
 7S4.388 
 
 4. Charter Oak, Conn 
 5- Continental, Conn . 
 
 8,491,387 
 
 1,7^2,050 
 
 553*472 
 207,848 
 
 7,937*915 
 1,454,202 
 
 6. Columbia, Mo 
 
 2,824,169 
 
 249.2SO 
 
 2,^74,019 
 
 7. Life Association, Mo 
 8. Am. Nat'lL. &T., Conn. 
 9. American, Pa . 
 
 i,935> s 4 
 668,758 
 
 I,3O2,S33 
 
 417,279 
 66,876 
 4^4, I9S 
 
 1,518,567 
 601,882 
 848,338 
 
 Seven small companies . . 
 
 1,190,012 
 
 533^8 
 
 657,004 
 
 TOTALS 
 
 $2I,OQ3XOO 
 
 $3,011,448 
 
 $18,082,052 
 
 
 
 
 
 Includes Hahnemann, Ohio, and Economical R. I. 
 Liabilities include a loss of $5,446,749 in scaling policies in 1877. 
 Includes St. Louis Mutual, Atlas and De Soto. 
 Includes Empire State Mutual, N. Y. 
 
 16 
 
accessible show the total loss to policy-holders 
 by failures among American life companies to 
 be about thirty-five million dollars, nearly all 
 of which occurred during this period. 
 
 The statutes applicable to winding up in- 
 solvent companies were entirely inadequate, 
 and much expensive litigation was necessary to 
 determine what the law really was. Meanwhile 
 the waste and extravagance of receiverships 
 went on until they became almost as great a 
 scandal as the mismanagement of companies 
 that had brought them into being. The situ- 
 ation was more acute in New York State than 
 elsewhere because, of the forty-six companies 
 which ceased doing new business, twenty-seven 
 had their domicile in that State. Governor 
 Robinson called attention to the subject in his 
 annual message of 1878, and the delegates to 
 this Convention at its meetings in 1877 and 
 1878 adopted resolutions deploring the evils of 
 receiverships, and pledging themselves to make 
 every effort to save companies from receivers' 
 hands. The Legislature did but little to pro- 
 tect the interests of policy-holders, and the ill- 
 timed denunciation of Life Insurance indulged 
 
in by some of its members often failed to dis- 
 criminate between well-, and ill-managed com- 
 panies, and so added to public distrust. The 
 insurance legislation of this period in New 
 York, which was intended to be remedial, was : 
 A law (in 1873) limiting the Superintendent's 
 charges for examining companies to actual 
 expenses, and providing a specific method of 
 payment; a law (in 1876) requiring the com- 
 panies to give thirty days' notice of premiums 
 falling due before declaring policies lapsed ; a 
 law (in 1877) forbidding life companies to re- 
 insure risks without the written consent of the 
 insured, and authorizing receivers to re-insure 
 the whole or any part of the risks of insolvent 
 companies; a law (in 1879) regulating and ex- 
 pediting the winding up of insolvent compa- 
 nies ; and a non- forfeiture law (in the same 
 year) which was somewhat less liberal in its 
 provisions than the terms which were freely 
 granted under the policies of most companies. 
 The value of these measures of relief will be 
 apparent when I say that a failure involving a 
 very heavy loss to policy-holders occurred in 
 1883, several years after the last law mentioned 
 was enacted. 18 
 
Other important legislation of the period 
 was the reciprocal valuation law (1873); the 
 law (1873) allowing a life company to purchase 
 its own policies issued in favor of a wife with 
 reversion to children; the law (1879) allowing 
 such policies to be assigned ; and the Massa- 
 chusetts law (1880) requiring the companies to 
 pay a cash surrender value if requested at the 
 end of any year after the first. 
 
 The loss, to solvent companies, of business 
 as well as of prestige, during this period, was 
 very great. In 1870 the income of the com- 
 panies doing business in New York was $105,- 
 000,000, in 1879 it was $76,000,000; in 1870 
 the new business was $588,000,000, in 1879 it 
 was $168,000,000; in 1870 the risks in force 
 were $2, 02 4, ooo, ooo, in 1879 they were $ 1,440,- 
 000,000. Notwithstanding the removal of so 
 many competitors from the field, the business of 
 the thirty-one solvent companies was less in 
 1879 tnan tnat of the same companies in 1870; 
 their income was two millions less, their risks 
 in force were seventy millions less, and their 
 new business had fallen off over one-half. The 
 total new paid-for business of all the compa- 
 
nies in 1879 was nearly thirty-eight million 
 dollars less than has since been written in one 
 year by a single company. 
 
 Yet all these losses and failures are but a 
 part and a small part at that of the loss and 
 failure which overtook the business interests of 
 the country generally during the same period. 
 The financial panic of 1873 marked the cul- 
 mination of the over-trading, over-building and 
 over-capitalization which resulted naturally from 
 the inflation of the currency during the Civil 
 War. Life Insurance had grown more rapidly 
 than any other business of equal magnitude; 
 its failures and losses were proportionally much 
 less. At the end of 1873 the entire capital 
 account of the railroads of the country was 
 about thirty-eight hundred million dollars, and 
 during the next six years roads representing 
 nearly one thousand millions were sold under 
 foreclosure or went into receivers' hands. The 
 assets held by failing life companies amounted 
 to about one-ninth of the total; the assets of 
 defaulting railroad companies represented over 
 one-quarter of the total. About one-fourth of 
 all the savings banks in New York went out of 
 
 20 
 
existence during the six years following 1871, 
 with losses amounting to about four and one- 
 half million dollars. The Superintendent of 
 the Banking Department, commenting on these 
 failures, said, if the funds of all savings banks 
 in the State had been invested in United 
 States bonds in 1871, the shrinkage would have 
 been seven million dollars; if in the best rail- 
 road securities, it would have been over thirty 
 millions; if in the best bank stocks, thirty-five 
 millions; and if in real estate, from forty to 
 fifty millions. 
 
 It has been the custom of writers who would 
 exalt Life Insurance to give scant space to the 
 discussion of the failures and losses of this 
 period; but to my mind there is no period in 
 Life Insurance history that deserves more care- 
 ful study, and none that contains more valuable 
 lessons to the life insurance manager. Why 
 did these companies fail? A true and com- 
 plete answer to that question would put every 
 officer and every trustee of a life company on 
 his guard against like causes and a like catas- 
 trophe. As we have already seen, these fail- 
 ures were contemporaneous with many other 
 
 21 
 
failures in the business world, and something 
 must unquestionably be allowed for the great 
 shrinkage in values, as measured by the cur- 
 rency of the country, between 1864 and 1879. 
 But the companies that survived and increased 
 in strength were obliged to meet the same 
 conditions, how did they escape? A study 
 of the reports of this period shows but very 
 little charged off to profit and loss by the fail- 
 ing companies; but a study of their condition 
 at the time of failure shows a great gulf be- 
 tween actual and assumed values of assets. 
 In many of these companies gross frauds had 
 been practiced for years, and a thorough ex- 
 amination would have exposed them. In 
 others, loans had been made on insufficient 
 security and with evident profit to favored in- 
 dividuals. In some cases loans upon which 
 neither interest nor taxes had been paid for 
 years were carried on the books at their full 
 face value. Such assets, under the inexorable 
 rules of a receivership, melted away like snow 
 beneath a summer sun. Six of the largest 
 failing companies having their domiciles in 
 New York State made the following showing: 
 
 22 
 
Real estate owned and bonds and mortgages 
 on real estate, at the companies' last reports, 
 $14,160,057; amount realized from same by 
 receivers, $4,449,984, or about thirty-one and 
 one-half per cent. All other assets, by com- 
 panies' last reports, $4,538,196; amount real- 
 ized by receivers, $2,232,424, a little over 
 forty-nine per cent. During the continuance 
 of these receiverships there was received, in 
 addition to the foregoing, as interest and rents 
 on all property, $676,030, and $908,302 was 
 paid out as real estate expenses. Other ex- 
 penses of these receiverships were $1,678,172, 
 or a little over twenty-two per cent, of total 
 receipts. 
 
 But what brought these companies so near 
 the "ragged edge" of insolvency, according 
 to their own statements and valuations, that 
 their true condition could no longer be con- 
 cealed? For an answer to this question I 
 have tabulated the most important items of 
 income and expenditure of the largest of these 
 companies, as they appear in the New York 
 reports, from 1864 until the companies ceased 
 doing business in the State. The examination 
 
 23 
 
covers seven New York companies with an 
 average of over twelve years of business, and 
 seven other-state companies with an average 
 of over six years of business. These fourteen 
 companies absorbed by re-insurance previous 
 to their demise fourteen other companies, and 
 together they represent the bulk of the fail- 
 ures, as regards amount of business and losses 
 incurred, that have taken place among Ameri- 
 can life insurance companies. As a standard 
 of comparison I have taken the record for ten 
 years, 1865 to 1874, both inclusive, of the 
 twenty-six companies which were in existence 
 during the period, 1864-1879, and which are 
 still solvent and active. The following is a 
 summary of the results : (i) The Interest Rate 
 of the failing companies was nearly one per 
 cent. (.86) less than that of the solvent com- 
 panies ; (2) Expenses of Management in the 
 failing companies were nearly seven per cent, 
 more of premium receipts, or about four and 
 one-half dollars more per thousand of insur- 
 ance in force, than in the solvent companies; 
 (3) Death-Claims Paid were nearly three per 
 cent, more of premium receipts, or nearly three 
 
 24 
 
dollars per thousand of insurance, higher in the 
 failing companies than in the solvent com- 
 panies. The higher rate of interest earned by 
 the solvent companies would have given the 
 failing companies nearly four million dollars 
 more in interest receipts ; the lower rate of 
 expenses of management of the solvent com- 
 panies would have saved the failing companies 
 between twelve and sixteen million dollars; * 
 and the lower death-claim ratio of the solvent 
 companies would have saved the failing com- 
 panies between four and ten million dollars.* 
 
 During the period covered by this review 
 the failing companies paid nearly nineteen mill- 
 ion dollars in dividends to policy-holders, but 
 the ratios, both to premiums and to insurance 
 carried one year, were but little more than 
 one-half as large as in the solvent companies. 
 The results attained by considering the ques- 
 tion from opposite sides corroborate each other; 
 for example, the additional amount needed by 
 the failing companies to pay as large dividends 
 as were paid by the solvent companies would 
 have been (according as the ratio to insurance 
 
 * According as it is calculated on premiums or insurance. 
 2 5 
 
or to premiums is used) from fifteen to twenty 
 million dollars; while the saving to the failing 
 companies by ratios of interest, expenses and 
 death-claims as favorable as those of the sol- 
 vent companies, would have been from twenty 
 to twenty-nine million dollars. With the same 
 rates of interest, expenses and death-claims as 
 the solvent companies, the failing companies 
 might have paid the same rate of dividends 
 and added from five to nine millions to surplus; 
 the solvent companies, with almost exactly 
 three times as much business, in the period 
 under review, actually added over sixteen mill- 
 ions to surplus. 
 
 ITEMS COMPARED. 
 
 Fourteen 
 Failing Companies. 
 
 Twenty-six 
 Solvent Companies. 
 
 Premiums Received 
 
 $181,311,456 
 
 $542,433,216 
 
 Interest Received 
 
 2'?,II | ?,'3'?O 
 
 107,527,706 
 
 Expenses and Taxes 
 
 42,047,901 
 
 89,365,506 
 
 Death -Claims Paid 
 
 4^,684,008 
 
 122,526,057 
 
 Dividends Paid 
 
 18 877, I4S 
 
 116,003,445 
 
 Assets at Interest One Year . 
 Insurance Carried One Year . 
 Average Interest Rate 
 
 43 6 > I 45>764 
 3,469,945,312 
 5 30 per cent 
 
 1,747,045,422 
 11,706,789,279 
 6. 16 per cent. 
 
 Expenses to Premiums 
 
 23. 19 per cent. 
 
 1 6 47 per cent 
 
 Expenses per $1,000 Ins 
 Death-Claims to Premiums . . 
 Death-Claims per $1,000 Ins. 
 Dividends to Premiums 
 Dividends per $1,000 Ins 
 Expenses and Death-Claims to 
 Premiums . 
 
 $12.12 
 
 25.20 per cent. 
 $13.17 
 10.41 per cent. 
 
 $5-44 
 A$ 39 per cent. 
 
 $7-63 
 22.59 per cent. 
 $10.47 
 21.38 per cent. 
 $9.91 
 
 39.06 per cent. 
 
 Expenses and Death-Claims 
 per $ l,ooo Insurance 
 
 $25.29 
 
 $18.10 
 
 26 
 
It seems clear from this review that these 
 failures resulted from bad management, in the 
 broadest sense of the term. It was extrava- 
 gant, wasteful, dishonest. It paid too much 
 for services rendered; it did not take proper 
 care of the results obtained. The data upon 
 which it proceeded were not deceptive ; no 
 company failed because of an excessive death- 
 rate, nor (save in a single case) because it was 
 impossible to realize a rate of interest equal to 
 that upon which its premiums were cast.* The 
 assumption which failed was that the loading 
 on the net premiums would equal expenses and 
 losses on investments. Some of the smaller 
 companies were indeed honestly-managed, and 
 re-insured while solvent; their mistake was 
 in re-insuring in badly managed companies. 
 There were others which might have been 
 saved by more judicious handling on the part 
 of officers of the law; their mistake was in ap- 
 proaching so near the " dead-line" that officers 
 of the law could drag them over it. In no 
 other business is failure so disastrous as in Life 
 
 *The Universal, which assumed six per cent, interest in calcu- 
 lating its premiums. 
 
 27 
 
Insurance; in no other is it so unnecessary; 
 in no other is it, therefore, so inexcusable. It 
 is of no use to lay the blame of failure upon the 
 law that makes a net valuation the test of sol- 
 vency, because this law existed before most of 
 these companies began business. That was 
 one of the conditions of their life, to be pre- 
 pared for and conformed to, as much as any 
 other condition. As it is the province of history 
 to teach us how we may avoid the mistakes of 
 our predecessors, I venture to suggest the fol- 
 lowing as some of the safeguards suggested 
 by this study : 
 
 1. The utmost care in making investments 
 security to be always the paramount con- 
 sideration. 
 
 2. The necessity of frequent revaluations 
 of securities, and of their rigid adjustment to 
 changing conditions. 
 
 3. The close study of a company's business 
 upon the principles of the " Gain and Loss 
 Exhibit" now required by several Insurance 
 Departments. 
 
 4. The assumption, for purposes of practical 
 administration, of a higher standard of reserve 
 
 28 
 
than that by which the company's solvency is 
 tested under the law. 
 
 The first of these suggestions may reduce 
 the rate of interest, but it will save the princi- 
 pal ; the second will prevent any serious reduc- 
 tion of assets by insurance officials ; the third 
 will locate the fault of administration, if there 
 be one ; and the fourth will preserve a strip of 
 neutral ground between the path the company 
 has marked out for itself and the line to which 
 it cannot come near with safety. 
 
 In 1879 the epidemic of failures which had 
 set in nine years before had run its course; the 
 patients were nearly all dead, and the business 
 of the remaining companies began to improve. 
 In 1879 the new insurance showed an increase 
 from its lowest point; in 1880 insurance in force 
 showed an increase from its lowest point; and 
 in 1 88 1 the total income showed an increase 
 from its lowest point. No one but those who 
 were familiar with the business in those troubled 
 years can realize how hard the struggle was, 
 nor how much effort was required to regain lost 
 ground. We talk lugubriously sometimes of 
 the difficulties of getting business in these latter 
 
 29 
 
days, because of the fierce competition which 
 means, practically, that the difficulties are of 
 our own creating ; in the years which we are 
 reviewing, the whole outside world seemed in 
 arms against the life insurance manager. Not 
 until 1886 was the insurance in force of com- 
 panies doing business in New York as great 
 as in 1872 ; not until 1887 was tne total income 
 as large as in 1873; and not until 1888 was 
 the new insurance as much as in 1869. It took 
 from fourteen to nineteen years to repair the 
 losses which life insurance suffered by reason of 
 commercial depression and internal mismanage- 
 ment. 
 
 RISE OF ASSESSMENT SOCIETIES. 
 
 Another result of these same causes was 
 that multitudes of men who felt the need of life 
 insurance protection, sought a substitute for it 
 in co-operative and fraternal societies. I am 
 aware that there is well-founded objection to 
 calling the operations of these societies in- 
 surance, and it will be stoutly maintained by 
 some that there is but one system of real life 
 insurance; nevertheless there may be many 
 
 3 
 
systems of post-mortem relief, and it is hardly 
 worth while to quarrel about the name so long 
 as we apprehend the fact. There is no ques- 
 tion but that many co-operative and fraternal 
 societies operating between 1870 and 1880, in 
 spite of their imperfect system and because of 
 honest management, furnished better protec- 
 tion to their patrons than the level-premium 
 companies whose demise we have been con- 
 sidering although the latter were organized 
 upon plans that were unassailable, ran their 
 course of wickedness under the segis of the 
 law, and died in the odor (a very bad odor, to 
 be sure) of regularity. While the business 
 of the level-premium companies that failed was 
 but a small percentage of the whole, and there 
 were always sound and well-managed com- 
 panies in the field, yet the losses were never- 
 theless great and wide-spread, and it was little 
 comfort to one who had lost the accumulations 
 of years to be told that he should have insured 
 in a better company. A system that furnished 
 (or even promised) present protection at low 
 cost, and did not profess to accumulate money 
 for future needs, appealed very strongly to 
 
 3' 
 
men who did not understand theories of in- 
 surance, but who were angry and sore at 
 heart over losses under a system that pro- 
 fessed to be perfect. 
 
 There are no official data for ascertaining 
 the number of co-operative and fraternal so- 
 cieties organized in the seventies; but there 
 are now twenty of each class doing business 
 in New York State, which were organized 
 prior to 1880. The first Handbook of As- 
 sessment Insurance was published in 1886* 
 and contained the statistics of 367 societies, 
 119 of which were organized prior to 1880. 
 Reports were first required from such socie- 
 ties by the Pennsylvania Department in 1874, 
 and by the Massachusetts and New York 
 Departments in 1882. These societies have 
 undertaken to supply post-mortem relief by 
 levying its cost upon members in a variety 
 of ways. There have been four plans of as- 
 sessment insurance, all of which are still in 
 use, but which may be stated in the order of 
 their development and of their approach to 
 the level-premium plan, as follows : (i) To 
 
 * By the Spectator Company, New York. 
 32 
 
assess all members alike, for current cost only; 
 (2) to assess, for current cost only, according 
 to a table graduated for age at entrance; (3) 
 to assess according to a table graduated for 
 age at entrance, and lay aside an arbitrary 
 sum or proportion of assessments for a reserve 
 fund; (4) to charge a level premium, calculated 
 upon assumptions which give rates approxi- 
 mating those of level-premium companies, lay 
 aside a reserve fund on the same assumptions, 
 and reserve the right to assess for any de- 
 ficiency. The order in which these plans have 
 arisen, as well as their nature and the actual 
 workings of each, clearly demonstrate that if 
 an organization would do what the level- 
 premium companies guarantee to do, it must 
 do it in their way, and that methods which 
 require less from members provide less for 
 members, and are likely to miss the one great 
 end of all insurance namely, the certainty 
 of indemnity when the loss occurs. 
 
 The operations of these societies have 
 been attended with a large degree of success 
 if we measure success by the number of 
 persons who have joined them and by the 
 
 33 
 
aggregate amount paid in post-mortem bene- 
 fits. If, on the other hand, we regard their 
 claim to supply real life insurance at a much 
 lower price than that charged by the level- 
 premium companies, then we must consider 
 them to have totally failed of their purpose. 
 Of course, bad management has been a fruitful 
 source of evil here, as well as in level-premium 
 insurance. The ease with which such societies 
 could be organized, and their comparative free- 
 dom from official oversight until within a few 
 years, led at one time to a speculative craze 
 in policies upon the lives of aged and invalid 
 persons in Pennsylvania, and fraternal endow- 
 ment societies have filched from the people 
 of many States amounts which rival the losses 
 of the failing level-premium companies.* It 
 must be observed also that the experience of 
 these societies hab not justified their philippics 
 against the expense rate of the level-premium 
 companies. The expense rate of the level- 
 premium companies doing business in New 
 York State in 1897 was less than twenty-three 
 per cent, of income, while in the co-operative 
 
 * Massachusetts Insurance Report, 1893, pages x-xvi. 
 34 
 
societies it was over twenty-eight per cent, of 
 income, and in the fraternals if we allow four 
 dollars per year for lodge dues the rate was 
 over twenty per cent, of income. 
 
 The effect of the operations of these socie- 
 ties upon the business of level-premium com- 
 panies must be largely a matter of guess-work. 
 My own view is that it has been, in the main, 
 beneficial. They have taught people the cost 
 of temporary protection and the value of 
 permanent insurance. As these societies usu- 
 ally provide for no other than post-mortem 
 benefits, it is clearly seen that to furnish such 
 benefits from year to year costs a considerable 
 sum, even when the member survives, hence 
 it is usually easy for the level-premium com- 
 pany to show that, if the insured is willing to 
 pay a reasonable price for such indemnity in 
 case of death during a selected period, the 
 company will return to him, if he survives 
 the period, all his overpayments, with interest. 
 The men who join these societies may be 
 divided into two classes first, men who would 
 not or could not, for the time being, take level- 
 premium insurance ; and second, men who join 
 
 35 
 
the society for term insurance and for social 
 purposes. There is a constant influx of mem- 
 bers from the societies to the companies, while 
 the number of those going in the opposite 
 direction is, I apprehend, very small indeed. 
 There are now seventy-eight co-operatives and 
 fifty-five fraternals doing business in the State 
 of New York ; these societies are the largest 
 in the country, and do the bulk of this class 
 of business, yet their total income is surpassed 
 by that of a single old-line company.* 
 
 II.-i88i-i897. 
 
 The period from 1881 to the present time 
 has been one of uninterrupted progress. 
 There has been but one failure of impor- 
 tance, and the business has steadily grown in 
 public favor. While it required fourteen years 
 to regain the volume of insurance and income 
 reached in 1872 and 1873, ^ on ^y required 
 seven years more to double it. This time the 
 increase came under healthful financial condi- 
 tions ; it came to companies which had been 
 
 * The Mutual Life. 
 
 36 
 
tried as by fire ; and it came to stay. The 
 notable features of this period have been a de- 
 cline in the interest rate, the rise of industrial 
 insurance, the liberalizing of the policy con- 
 tract, and an increase in the expense rate. 
 
 DECLINE IN INTEREST RATE. 
 
 During the First Convention of Insurance 
 Officials, a committee headed by Mr. D. P. 
 Fackler reported that in 1870 the companies 
 doing business in Massachusetts earned over 
 six per cent, interest on average gross assets. 
 Ex-Superintendent William Barnes submitted 
 a voluminous paper on the rate of interest 
 to be assumed in computing a life company's 
 liabilities, in which he said : 
 
 "It is entirely clear that a governmental 
 standard for valuations will be even more than 
 safe, if the rate of interest assumed is not in 
 excess of that which can be realized by invest- 
 ments in the public funds. An hundred mill- 
 ion dollars can now be so invested at par, in 
 a moment, with five per cent, interest payable 
 quarterly and free from national, state or 
 municipal taxation. Beyond reasonable ques- 
 
 37 
 
tion, investments can be made in the United 
 States public funds, for an indefinite period 
 of time, in such a manner as to realize four and 
 one-half per cent, interest, compounded an- 
 nually." 
 
 Other eminent authorities* gave it as their 
 opinion that six per cent, interest would be 
 obtainable on first-class securities for a gen- 
 eration to come. Yet six years later United 
 States four per cent, bonds were selling at par. 
 The legal rate of interest in the State of 
 New York was reduced from seven to six per 
 cent, in 1879, taking effect on January i, 1880. 
 In 1884 the Legislature enacted that on and 
 after December 31, 1887, the official valua- 
 tion of life policies should be made upon the 
 Actuaries' Table of Mortality with interest at 
 four per cent, instead of upon the American 
 Table with interest at four and one-half per 
 cent. Most of the other States wherein the 
 latter standard obtained have made the same 
 change. Although this change required about 
 thirty million dollars to be added to the re- 
 
 * David A. Wells, Sheppard Romans, Elizur Wright, David 
 Parks Fackler and C. F. McCay. See Report First Session, pp. 163, 
 167, 168, 170, and Second Session, p. 88. 
 
 38 
 
serve funds of companies doing business in 
 the State, it did not prove greatly burden- 
 some to the companies, most of which had 
 previously maintained a reserve by the higher 
 standard in order to comply with the require- 
 ments of States wherein such higher standard 
 prevailed. The average rate of interest re- 
 ceived by the companies doing business in 
 New York from 1871 to 1897 shows a de- 
 crease of about one and one-half per cent. * 
 
 It would not be a fair inference from the 
 foregoing that the decrease in the interest rate 
 will be as great during the next twenty-seven 
 years as it has been during the twenty-seven 
 just past, because by that rule the rate would 
 in the course of time reach the vanishing 
 point ; but we cannot fail to note that, if 
 the interest rate realizable on Government 
 securities be taken as a standard, a three 
 per cent, standard in 1898 would be less 
 conservative than a four and one-half per 
 cent, standard was in 1871. While I would 
 not urge any change in the legal standard 
 at present, I would suggest that it will be 
 
 *See table, page 71. 
 
 39 
 
the part of wisdom on the part of life insur- 
 ance companies to make gradual provision for 
 such a change. Conservatism in the matter 
 of interest assumptions has been of incalcu- 
 lable value to American Life Insurance. The 
 early companies were obliged to rely upon 
 English experience for mortality rates, and in 
 calculating their premium rates they adopted 
 the English standards as to interest rates 
 also. This gave a premium from which it 
 has always been possible to make a reserve 
 at the highest standard adopted by any State. 
 In the Convention of 1871 a strenuous effort 
 was made by two stock companies, which 
 calculated their premiums on a six per cent, 
 interest rate, to create an opinion favorable 
 to allowing them to make their reserves on 
 the same interest basis. One of these com- 
 panies was the Universal, which failed five 
 years later, having received an average of 
 only five and three-quarters per cent, during 
 its whole history ; the other was the National 
 of U. S. A., still solvent, but now winding 
 up its affairs. If the early interest assump- 
 tions had not been very much below the rate 
 
 40 
 
obtainable, it is easy to see that all the early 
 companies might have been seriously embar- 
 rassed, instead of being as they always have 
 been the very bulwarks of the business. 
 
 RISE OF INDUSTRIAL INSURANCE. 
 
 Industrial insurance, although in operation 
 in England since 1854, was first introduced 
 into this country in 1873. In 1880 three 
 companies were issuing this form of indem- 
 nity, and the amount in force at the end of 
 the year was somewhat over $13,000,000. 
 On December 31, 1897, the number of poli- 
 cies in force was nearly eight millions, in- 
 suring nearly one thousand million dollars. 
 The amount insured under industrial policies 
 now exceeds the total life insurance in force 
 in this country prior to 1867. Its salient 
 features have been (i) weekly collections of 
 premiums at the homes of the insured; (2) 
 the insurance of the whole family ; (3) uni- 
 form rates for males and females ; (4) limita- 
 tion of the amount of insurance upon lives 
 under ten years of age to burial fund pro- 
 portions. Premiums are five cents per week 
 
 41 
 
and upward, insurance $15 and upward. The 
 average premium is about ten cents per week, 
 and the average insurance about $125. 
 
 Fortunately for the business and for the 
 insured, the industrial business has been done 
 by a few companies, and those doing the bulk 
 of it have been managed with the highest in- 
 tegrity and skill. They have sought to furnish 
 insurance that should be, first of all, safe, and 
 then to make every device for lowering its cost 
 inure to the benefit of policy-holders. The 
 industrial companies have had to overcome 
 anew the prejudice which was formerly direct- 
 ed against the companies insuring for larger 
 amounts. Professional philanthropists have 
 again and again conjured up the spectre of 
 children starved and murdered for the sake of 
 an insurance that would scarcely afford decent 
 burial. Over against the spectre, the industrial 
 companies have once and again set the facts, 
 showing care in the selection of risks and in 
 the payment of claims, and the further fact 
 that the mortality among insured infants is 
 lower than the average infantile mortality. 
 Over against accusations of placing burdens 
 
 42 
 
upon poverty, the companies have shown that 
 an increase in industrial insurance has gone 
 hand in hand with an increase in savings bank 
 deposits. 
 
 As bearing upon the history of Life Insur- 
 ance, several points must be noted : 
 
 i. The industrial companies have immense- 
 ly broadened the field of Life Insurance. They 
 have not only extended its benefits to a large 
 number of persons insuring for small amounts, 
 but they have included classes heretofore con- 
 sidered uninsurable. They have demonstrated 
 that it is possible to ascertain and cover by an 
 adequate premium the risk of death upon prac- 
 tically every healthy human being who is not 
 living in flagrant violation of moral and hygi- 
 enic laws. The companies have been obliged 
 to contend with a death-rate among adults 
 over twice as great as that which has pre- 
 vailed among the companies doing an ordinary 
 life insurance business, and to ascertain by 
 actual experience the death-rate among chil- 
 dren ; but they have within comparatively few 
 years obtained the facts, and reduced them to 
 a science, upon which they have upreared the 
 
 43 
 
stately structure of Industrial Insurance. The 
 number of industrial policies now in force is 
 over three and one-half times as great as the 
 number of ordinary policies ; and, while the 
 amounts are small, who shall say that the ser- 
 vice done each family is not as great in the 
 one case as in the other ? The poor of to-day 
 are often the well-to-do of to-morrow, especi- 
 ally if they observe the rules of industry, 
 economy and forethought which industrial in- 
 surance is so well adapted to teach. Having 
 constantly before their eyes the benefits of 
 insurance in small amounts, they will not fail 
 to see the advantage of larger amounts when 
 they are able to carry them. 
 
 2. Again, the industrial companies have 
 shown that it is worth while to do small things 
 in order to accomplish great things that the 
 business will bear whatever expense is neces- 
 sary to do it in the best way. The companies 
 have learned that the industrial classes will 
 not save money and pay for insurance by 
 quarterly or monthly premiums; that they will 
 not take insurance that involves remittances 
 by mail or by periodical payments at an office; 
 
 44 
 
but that they will cheerfully pay the cost of it 
 if it is brought to their homes and sold on 
 weekly instalments. In their personal atten- 
 tion to policy-holders, in their management of 
 details, and in their efforts to cheapen the cost 
 of insurance to their patrons, the industrial 
 companies have shown a wisdom, a zeal, an 
 invention and a singleness of purpose, that 
 may well excite the admiration of their co- 
 laborers in the life insurance field. The condi- 
 tions of success seemed hard, but by accepting 
 them cheerfully and paying the price ungrudg- 
 ingly, these companies have earned a success 
 which is conspicuous in the annals of Life 
 Insurance. 
 
 3. If we look closely we shall perceive that 
 industrial insurance so far as it applies to in- 
 fants has introduced a new principle. Every 
 other kind of insurance is indemnity for value 
 lost ; infantile insurance is indemnity for ex- 
 pense incurred. The infant life has no pecun- 
 iary value; it does not produce it consumes; 
 but, if it ceases, an expense must be incurred 
 for its burial. The expense of its maintenance, 
 if it lives, can be provided for by the earnings 
 
 45 
 
of parents, because this expense like these 
 earnings will be so distributed as to require 
 but little outlay each week ; and so the ex- 
 pense, involving the instant outlay of a week's 
 wages or more, can be met in the same way 
 by industrial insurance. It is not exactly in- 
 surance upon life, but, in the language of the 
 charters and of the law, " insurance pertaining 
 to life." To my mind, a new dignity is added 
 to Life Insurance when it proclaims over the 
 cradle the sacredness of human affection, and 
 prepares to assuage the grief of the bereaved 
 by the assurance of Christian burial. 
 
 CHANGES IN THE POLICY CONTRACT. 
 
 This period has been pre-eminently an 
 era of changes in the policy contract. Not 
 only have many new policy forms been intro- 
 duced, but all the old forms have been made 
 more specific and more liberal with respect to 
 the rights of policy-holders. The old rivalry 
 between companies as to the amount of the 
 annual dividend which was always contingent 
 has given way to a rivalry as to benefits 
 which may be guaranteed in the policy. The 
 
 4 6 
 
system of annual dividends has been super- 
 seded to a very large extent by long-dividend 
 periods, with the options of continued insur- 
 ance, or cash value at the end of the first divi- 
 dend period. The option of cash value is also 
 made available under many policies at the end 
 of other periods. This change had its origin, 
 as we have seen, as far back as 1869, and it 
 received a new impetus when the first ic-year 
 dividend policies began to mature. In 1880 
 Massachusetts enacted the first cash surrender 
 value law, and the practice of guaranteeing 
 cash surrender values at definite periods was 
 soon after adopted by most companies, even 
 though annual dividends were continued. All 
 companies now guarantee cash surrender val- 
 ues. The companies which first adopted the 
 Tontine system restored the non- forfeiture 
 clause, and have been among the foremost in 
 liberalizing the contract. 
 
 Other new features introduced have had 
 for their chief ends: (i) to relieve the policy- 
 holder from vexatious restrictions; (2) to assist 
 him in keeping the policy in force ; and (3) to 
 provide for its certain and prompt payment 
 
 47 
 
at maturity. The restrictions removed have 
 been chiefly those relating to occupation, to 
 residence and travel, and to the personal habits 
 of the insured. The usages of forty-two com- 
 panies now doing business in the United States 
 may be summarized as follows : 
 
 Residence and Travel. The policies of six- 
 teen companies contain no restrictions upon 
 residence and travel ; six companies impose 
 restrictions during the first policy year only ; 
 seventeen companies impose restrictions dur- 
 ing the first two years of the policy; one 
 company imposes restrictions during the first 
 three years of the policy ; and two companies 
 make restrictions continuous. 
 
 Occupation. The policies of ten companies 
 impose no restrictions upon occupation ; six 
 companies impose restrictions during the first 
 year of the policy ; twenty companies impose 
 restrictions during the first two years of the 
 policy ; one company imposes restrictions dur- 
 ing the first three years of the policy ; and five 
 companies make restrictions continuous. 
 
 Military and Naval Service. The policies 
 of nine companies contain no restrictions upon 
 
 48 
 
military or naval service; six companies impose 
 restrictions during the first two years of the pol- 
 icy; twenty-seven companies impose restrictions 
 during the continuance of the policy. Among 
 the latter class there is a considerable diversity 
 in the treatment of this risk. The terms actu- 
 ally accorded to policy-holders in the military 
 and naval service of the United States dur- 
 ing the present war, while showing equally 
 great diversity, have usually been more liberal 
 than those provided under the companies' con- 
 tracts. 
 
 Intoxicants and Narcotics. The policies of 
 seven companies become void, or may be can- 
 celed during a limited period, in case of the 
 excessive use of intoxicants or narcotics. In 
 some cases the reserve, or the premiums paid, 
 are returned. Seven companies require the 
 applicant to warrant that he is temperate. The 
 policies of twenty-eight companies contain no 
 restrictions on these points, although the appli- 
 cant's habits are inquired into. 
 
 The changes in the policy contract designed 
 to assist the policy-holder directly in keeping 
 it in force are: (i) grace in the payment of 
 
 49 
 
premiums; (2) the privilege of re-instatement; 
 (3) loans on the policy; (4) automatic non-for- 
 feiture conditions. The usage of the companies 
 upon these points is as follows: 
 
 Days of Grace. The policies of sixteen com- 
 panies provide that a grace of thirty days, or of 
 one calendar month, shall be allowed in the 
 payment of premiums; the policies of twenty- 
 six companies make no concessions on this 
 point. 
 
 Privilege of Re-instatement. The policies 
 of fifteen companies make provision for re- 
 instatement within periods ranging from thirty 
 days to twelve months ; the policies of twenty- 
 seven companies contain no assurance on this 
 point. 
 
 Loans. The policies of seven companies 
 make provision for loans after being in force 
 two years, those of sixteen after three years, 
 those of five after five years ; the policies 
 of fourteen companies make no provision for 
 loans. 
 
 N on- Forfeiture Conditions. The non-for- 
 feiture conditions of thirty-one companies are 
 automatic in their operation, so that an insur- 
 
 50 
 
ance value once acquired under a policy cannot 
 be lost ; the policy-holder receives it in some 
 form whether he makes request for it or not. 
 The policies of eleven companies require some 
 action by the insured within a limited time in 
 order to receive the benefits of the non-forfeiture 
 clause; the policies of twenty-seven companies 
 allow a choice between extended, and ordinary 
 paid-up, insurance; the policies of fifteen com- 
 panies make provision for but one form of 
 paid-up value. Of the twenty-six companies 
 which allow extended insurance, eighteen de- 
 duct the premiums falling due under the original 
 contract, in case of death within a limited 
 period; eight companies make no deduction. 
 
 Incontestability. The policies of thirty-six 
 companies contain clauses making them incon- 
 testable under certain conditions ; the policies 
 of six companies contain no such clauses. Of 
 the thirty-six, fifteen make their policies incon- 
 testable after a certain period upon the single 
 condition that premiums or notes given there- 
 for, with interest, be paid as agreed. Of the fif- 
 teen, one makes its policies incontestable upon 
 delivery, three after one year, eleven after two 
 
 5 1 
 
years. The incontestable clauses of the re- 
 maining twenty-one companies all contain some 
 further condition which is binding during the 
 life of the policy; but, subject thereto, the clause 
 is made operative by one company from date of 
 issue, by seven companies after one year, by 
 eleven companies after two years, and by two 
 companies after three years. 
 
 Suicide. The policies of seven companies 
 contain no suicide clause; the policies of eight 
 companies do not assume the risk of death from 
 self-destruction during the first year; those of 
 twenty-one companies do not assume it during 
 the first two years; those of four companies do 
 not assume it during the first three years; and 
 the policies of two companies never assume it 
 unless it is proved to be involuntary or the 
 result of insanity. 
 
 This review shows a great diversity of 
 treatment of the various conditions of insur- 
 ance and of the privileges allowed under the 
 policy contract. The encouraging feature of 
 it is, the liberality of all contracts as compared 
 with those of twenty years ago, and the evi- 
 dent effort which the companies are making 
 
 S 3 
 
to remove unnecessary restrictions upon the 
 action of the policy-holder, to give him as much 
 assistance in keeping up his policy as is deemed 
 consistent with the highest good of all, to make 
 sure that he shall not lose acquired values by 
 neglect or oversight, and to give him the 
 strongest assurance possible that no contest 
 will be made over the final payment of his 
 policy. As a chain is no stronger than its 
 weakest link, so every condition and every 
 restriction imposed upon the policy-holder 
 between the delivery of the contract and its 
 payment as a claim, creates a possibility of 
 failure. It may be remote, infinitesimal, but 
 it is there, as a menace, and as a preventive 
 of that certainty which the policy-holder seeks 
 in insuring. The fewer such conditions and 
 restrictions that are allowed to remain in the 
 policy, the fewer chances there will be of fail- 
 ure. The tendency already noted in the man- 
 agement of industrial companies has done 
 much for the better security of policy-holders 
 in the companies doing an ordinary business. 
 That tendency is to give the best possible 
 protection, taking no advantage of the policy- 
 
 53 
 
holder's ignorance, neglect or misfortune, but 
 seeking to provide against these by doing for 
 him whatever he will not do for himself, pro- 
 vided only he pays the cost. This is insurance 
 that insures, when a company takes no man's 
 money without rendering an equivalent in pro- 
 tection, according to the expense incurred, 
 
 THE EXPENSE RATE. 
 
 No review of this period would be com- 
 plete which failed to take note of the increased 
 expense ratio at which the business has been 
 transacted. In 1871 the ratio of expenses and 
 taxes to premiums for insurance was 21.61 per 
 cent. the highest point it had yet reached. 
 It then steadily declined to 17.38 per cent, in 
 1875 th e lowest point since reached. From 
 1875 ft increased to 30.47 per cent, in 1894 
 the highest point yet reached ; and from that 
 it declined to 29.28 per cent, in 1897. The 
 Wisconsin Insurance Report of the present 
 year shows that the expenses and taxes of all 
 companies doing business in the State were 98 
 per cent, of the loading earned on premiums 
 received. If we add to the loading the gain 
 
 54 
 
on lapsed and surrendered policies, consider- 
 ing it as a "surrender charge "to be used in 
 replacing retiring risks, expenses will then be 
 83 per cent, of the total amount available for 
 expenses. 
 
 I have on other occasions expressed the 
 opinion that expenses are too high, and there 
 is no phase of the business to which I have 
 given more careful attention than this. I may 
 say, however, after an experience of six years 
 as chief executive officer of a large company, 
 that it is much easier to criticise the rate of 
 expense than it is to say where a reduction 
 should be made. While we have made some 
 progress in this direction, I am compelled to 
 admit that progress must be slow, and that the 
 ratios of a quarter of a century ago are not 
 likely to prevail again for many years if ever. 
 An examination of the expense ratio since 
 1871 shows that the years when it was lowest 
 were the years when comparatively little new 
 business was done, and when Life Insurance, 
 as a whole, was retrograding. The question 
 must be looked at from various standpoints in 
 order to determine whether or not a given 
 
 55 
 
ratio is too high. The business is free to all 
 comers, and there are over fifty level premium 
 companies doing business in the United States. 
 They are all anxious to reduce the rate of ex- 
 pense, and each one has an opportunity to 
 strengthen its appeal for business by so doing. 
 Under such circumstances it would seem that 
 the expense rate would tend to regulate itself 
 under the stress of competition, here as else- 
 where. There are very few things so well 
 done that no improvements can be suggested ; 
 but, in practice, the improvements are not al- 
 ways possible. 
 
 Again, we may look at the question with 
 reference to the compensation received by 
 those who do the work. It must be remem- 
 bered that it is a business requiring as great 
 talent and skill as any of the great commercial 
 interests of the country banking, transporta- 
 tion, merchandising and that it is concentrated 
 in comparatively few hands. I venture to say 
 that the number of persons who are receiving 
 large incomes in the life insurance business is 
 smaller in comparison with the business itself 
 and in comparison with the responsibility in- 
 
 56 
 
curred, than in either of the other callings 
 mentioned. The salaries of all officers and 
 Home Office employes who are usually sup- 
 posed to enjoy princely incomes comprise 
 less than nine per cent, of the total expenses 
 of the life companies ; while taxes, licenses 
 and fees imposed by law in the various States 
 are equal to nearly five per cent, of the total. 
 Shall we say that the agents are overpaid ? 
 The great majority of life agents like the 
 great majority of men in every calling have 
 hard work to make a living. Of the 4,000 or 
 more agents in the employ of the New- York 
 Life Insurance Company in the United States 
 in 1897, a l ar ge proportion of whom devoted 
 all their time to the work, only 841 wrote over 
 $50,000 insurance during the year ; none of 
 the remaining 3,000 odd could have got from 
 his commissions an income of $1,000, and 
 many got much less. In contrast with this, 
 Mr. Edward Atkinson estimates the average 
 wages of specially skilled men in the mechan- 
 ical trades at over $1,200 per year, and those 
 of average mechanics at over $700 per year.* 
 
 * " Industrial Progress of the Nation," page 169. 
 
 57 
 
It will probably be said that the companies 
 are too eager for new business, and that they 
 spend too much money in order to make a 
 favorable showing in this respect. Suppose 
 we apply the same criticism to other great en- 
 terprises. Open your morning paper and read 
 the expensive advertisements. These people 
 are doing business for profit why not save all 
 this money? Besides this expensive publicity, 
 wholesale merchants and manufacturers em- 
 ploy methods similar to those of the life com- 
 panies, by maintaining agencies in many cities 
 and employing an army of traveling salesmen. 
 They will all tell you that these expenses are 
 necessary in order to sell goods. The opposite 
 method has been tried in life insurance. The 
 Equitable, of London, pays no commissions to 
 agents ; it has been in existence one hundred 
 and thirty-six years; and it has about $35,- 
 000,000 of insurance in force. It issues less 
 than four hundred policies a year. No doubt 
 it takes good care of such as come to it ; they 
 get their insurance at a low rate ; but very few 
 people would ever enjoy the benefits of life 
 insurance if all companies pursued such a pol- 
 
 58 
 
icy. Isn't it better for the community that life 
 insurance should be placed before every man 
 and urged upon every man, even at the cost 
 incurred by American companies, than that a 
 few should receive its benefits at a low rate ? 
 The object of a life insurance company should 
 be, first, to insure men at some rate ; and, sec- 
 ond, to make the rate as low as is consistent 
 with safety and with the fulfillment of its reason 
 for existence. 
 
 While I believe earnest and persistent ef- 
 forts should be made to reduce the expense 
 rate, I do not believe in a cheese-paring policy. 
 "The laborer is worthy of his hire," and the 
 man who labors faithfully for life insurance 
 should be able to live by life insurance. The 
 most inviting field for effort seems to be the 
 prevention of lapses. The second year is the 
 critical period, and the ratio of lapses in all 
 companies doing any considerable volume of 
 business is, and always will be, high at that 
 point. Various theories have been tested by 
 different companies, and contracts have been 
 made without renewal commissions to the 
 agent, and again with renewal commissions. 
 
 S9 
 
The results as shown by the reports to the 
 Insurance Department indicate that the re- 
 newal commission has had little, if any, effect 
 in reducing the lapse ratio, and companies 
 which offer a standard form of agency contract 
 based on a renewal commission to the agent, 
 find their business going off the books just 
 about as rapidly as the business of companies 
 operating solely on a brokerage basis. 
 
 The insured stands more nearly alone when 
 he faces his second payment. Even if the 
 agent who wrote the application is present, 
 and has interests to be subserved, other con- 
 siderations predominate. The inevitable reac- 
 tion from the work of the rebater asserts itself 
 at this point. In my judgment, the greatest 
 cause of abnormal and improper lapse in the 
 second year is the deplorable and indefensible 
 work of the " Lightning Agent" or " Execu- 
 tive Special" the Arch Rebater. There are 
 natural and unavoidable forces at work which 
 will make the lapses of the second year higher, 
 perhaps, than in any other year. These causes 
 we can never entirely eliminate they are a 
 part of the business. We can only hope by 
 
 60 
 
wise management to reduce the loss to the 
 lowest practicable point ; but the man who was 
 tempted to take his insurance in the first in- 
 stance because the agent submitted a proposi- 
 tion which appealed to the gambling instinct 
 of humanity, a proposition which substantially 
 offered to give him something for nothing, not 
 only has no intention of paying the second 
 premium, but he has been initiated into a vice 
 which spreads like a contagious disease : it 
 not only ruins him, but it contaminates and 
 ruins his neighbor, and ultimately ruins the 
 agent. 
 
 The second year brings a man seriously 
 face to face with the obligations of his contract. 
 If he was well and honestly insured in the 
 beginning, if he paid one hundred cents on the 
 dollar, he is mentally quite ready to go on. 
 The demand for the second premium brings no 
 element with which he is not already familiar, 
 and raises no question which he does not 
 already understand. He feels that he has had 
 nothing in the first year for which he has not 
 paid, and consequently he is not mentally upset 
 when he meets the conditions of the second 
 
 61 
 
year which exact the same cost for the same 
 protection. On the other hand, when the man 
 who received a rebate the first year is brought 
 face to face with the serious part of his con- 
 tract, which dates from the second premium, 
 he is mentally in the condition of a gambler. 
 He got something for nothing the first year; 
 or perhaps, more correctly speaking, he got a 
 great deal for a payment that was inadequate 
 and improper, and it is human nature for him 
 to want the same thing the second year. It 
 is natural for him to shrink from paying the 
 lawful price which the second year exacts, and 
 he dodges the obligation which thereafter he 
 cannot shirk, refusing to put more money into 
 a contract which from that time forth puts him 
 on a level with other men. 
 
 We cannot entirely overcome what I have 
 called the natural conditions surrounding the 
 payment of the second premium. Men's sur- 
 roundings change. Even when there is no 
 rebate offered, men may be overpersuaded by 
 the influence of a stronger mind. There are 
 men who have a proper sense of obligation 
 toward their families only spasmodically. All 
 
 62 
 
these things affect our business just at this point, 
 and always will. We can, however, to a very- 
 large degree, control the evil work of the re- 
 bater. Legislation on this subject has done 
 something, but we have learned from bitter 
 experience that it cannot reach the real seat of 
 the trouble. The one power that can effectually 
 check the rebate evil is the Executive Head of 
 each company doing business. If the agents 
 of all companies understood that rebating was 
 really prohibited, not only by law, but by the 
 explicit direction of the Home Office of the 
 companies they represent, and that back of that 
 explicit direction was a fixed purpose to execute 
 it, the evil would be largely decreased. A 
 merely passive desire on the part of Executive 
 Officers will accomplish very little. The deter- 
 mination to abate what is more than a nuisance 
 must assume an aggressive form. The agent 
 must understand that his superior officers will 
 not only notice a case of rebate if it is thrust 
 in their faces, but he must also understand that 
 they are looking for evidence, not only against 
 the agent of some other company, but against 
 him, and that if evidence is found, punishment 
 
 63 
 
will be swift and certain. Even this will not 
 wholly exterminate the evil practice. Men will 
 occasionally steal, notwithstanding the statute 
 law and the Ten Commandments. 
 
 I hold, therefore, that agency contracts 
 should be made on the theory that " the 
 laborer is worthy of his hire," and that a 
 good man is entitled to a good living. The 
 apparently high expense rate of the first year 
 that goes with this theory is perfectly legiti- 
 mate and necessary, and in my judgment 
 Life Insurance cannot otherwise be prosecuted 
 with sufficient vigor to fulfill its true mission. 
 But contracts which, to an outsider, appear 
 to have been cunningly devised for the pur- 
 pose of helping the agent to rebate, are quite 
 a different proposition. The old style renewal 
 contract was not devised for this purpose, but 
 in very many ways it has practically operated 
 to this end. There are styles of agency con- 
 tracts in force to-day, the product of a later 
 age, which convey the impression that they 
 are intended to place in the hands of the agent 
 exactly the tools which he needs to carry on 
 this most nefarious trade. 
 
 64 
 
Rebating and lapsing are twins, and if I 
 may perpetrate an Irish "bull," twins born a 
 year apart. The lapse follows the rebate, and 
 the rebate is a direct offshoot of improper 
 relations between the agent and his Home 
 Office. This brings the matter directly home 
 to those of us who hold executive positions, 
 and raises the question as to what kind of 
 agency contract will secure new business in 
 the best way, and by that means reduce lapses 
 to a normal level the second year. In attempt- 
 ing to answer this question, I, of course, pre- 
 suppose that the Home Office is unalterably 
 opposed to rebating, and is determined to 
 stop it, and that it cannot be tempted by any 
 mere volume of business into winking at facts 
 which indicate its existence, nor induced to 
 retain in its service either the large writer or 
 the small writer if he has been clearly guilty 
 of the rebate offense. 
 
 Assuming that such executive intention ex- 
 ists, the rebate evil and its twin, lapse, are not 
 uncontrollable. Any working system which 
 will make it to the interest of the agent to do 
 his business honorably from the beginning will 
 
 65 
 
tend to check the lapse rate. The industrial 
 companies have found that their best way of 
 accomplishing this is to pay a commission 
 on the increase in premiums in force. This 
 charges up all lapses to agents so far as com- 
 missions on new premiums are concerned 
 and acts as a wholesome check on the writing 
 of poor business and on the lapsing of business 
 which ought to persist. Whatever we may 
 think of the applicability of industrial insurance 
 methods to insurance under large amounts, we 
 must admit that the industrial companies have 
 overcome difficulties that seemed insurmount- 
 able, and that their experience and their ways 
 of solving the problems that have faced them 
 may at least furnish useful hints to the rest 
 of us. 
 
 In the company with which I am con- 
 nected we have devised a plan for binding the 
 agent closely and directly to the Home Office, 
 transforming his calling into a permanent one, 
 elevating his standard of character and of the 
 treatment due to his clients. This plan is 
 briefly, a system of annuities to agents, begin- 
 ning after a definite period of service, fixed in 
 
 66 
 
amount by the persistency of the business 
 issued as well as its volume (in this feature 
 embodying the essence of the industrial com- 
 panies' idea as to compensation of agents), and 
 continuing under well-defined conditions for 
 life. The results in our experience are already 
 marked and gratifying, and, while sufficient 
 time has not yet lapsed to afford a complete 
 demonstration, I am satisfied that we have 
 taken a step in the right direction. 
 
 I have said so much by way of criticism 
 that I am sure no one will grudge me a par- 
 agraph in praise of the benefits which Life 
 Insurance has conferred during the past twen- 
 ty-seven years. The companies have, during 
 that time, received from policy-holders over 
 three thousand million dollars ; they have paid 
 over one thousand millions in death-claims, and 
 nearly as much more in endowments, annuities, 
 dividends and surrender values. It will help us 
 to appreciate the significance of these figures if 
 we compare them with others which more 
 strikingly impress the imagination. A third of 
 a century ago a terrible civil war raged in this 
 country for four years. The number of deaths 
 
 67 
 
in the Federal armies is officially stated to 
 have been over 350,000; the National debt at 
 the close of the war exceeded twenty-seven 
 hundred million dollars; and the Government 
 has since paid in pensions over twenty-one 
 hundred millions. The debt was so great that 
 the Nation's ability to pay it was openly ques- 
 tioned, and our pension legislation has been 
 the most liberal the world has ever seen; yet, 
 since 1871, we have paid out for Life Insur- 
 ance more than the amount of the National 
 debt when at its highest point, and the pay- 
 ments of the life companies to their members 
 have nearly equaled the disbursements of the 
 Government on account of pensions. The Na- 
 tion poured out blood and treasure like water, 
 and laid a heavy burden upon posterity, that it 
 might insure its own integrity and perpetuity; 
 under Life Insurance, individuals have freely 
 paid these vast sums that they might insure 
 the integrity and perpetuity of their families, 
 and that their posterity might be free. The 
 patriot who gives his life for his country, and 
 the man who insures his life for the protection 
 of his family, alike link their being with the 
 
 68 
 
future by unselfish devotion to present duty, 
 and though they perish outwardly, they still 
 live 
 
 "In minds made better by their presence; live 
 In pulses stirred to generosity, 
 In deeds of daring rectitude, in scorn 
 For miserable aims that end with self, 
 In thoughts sublime that pierce the night like stars, 
 And with their mild persistence urge man's search 
 To vaster issues." 
 
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 panie 
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 35 
 
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 ization, 
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 e organiza 
 
 897, 
 
 Premium receipts since 
 Paid Policy-holders " 
 Assets December 31, 18 
 
RECEIPTS AND DISBURSEMENTS OF ALL LIFE COMPANIES 
 
 DOING BUSINESS IN THE UNITED STATES, DURING 
 
 THE 27 YEARS, 1871-1897. 
 
 Insurance Premiums $3 , 1 39,293, 003 
 
 Annuity Premiums 49> I 5595 I 
 
 Interest and Rents 879,830,767 
 
 Total Income $4,068,279,721 
 
 Death-Claims Paid $1,051,006,646 
 
 Endowments 84,95 1 >^4O 
 
 Annuities 29, 524,064 
 
 Surrender Values 426,250,525 
 
 Dividends 413,857,241 
 
 Total to Policy-holders $2,005,590,116 
 
 Expenses and Taxes $828,302,848 
 
 77 companies Assets January I, 1871 $272, 129,969 
 
 77 companies Surplus January I, 1871 $49,214,206 
 
 56 companies Assets January I, 1898 $1,344,589,632 
 
 56 companies Surplus January I, 1898 $187,794,037 
 
 77 companies Insurance in Force January I, 1871 .. $2,046,254,488 
 
 56 companies Insurance in Force January I, 1898 .. $5,328,072,646 
 
 Industrial Insurance in Force January I, 1898 $987,110,692 
 

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