CHAPTER XVIII.

Life Assurance.—Its Benefits.—Its Commencement.—Suicide of an Insurer.—Insurance of Invalid Lives.—The Gresham.—Sketch of the West Middlesex Delusion.

The day on which the first life-assurance office was established is worthy of remembrance by the great mass of the middle class. Faulty in construction, and erroneous in detail, it was the enunciation of a great principle, the birth of a great blessing. Innovations were not made in the eighteenth, any more than in the nineteenth century, however, without opposition; and when, in 1706, the Amicable commenced business, prophets were plentiful in declaring it must fail, while others announced that it would open the door to gambling, and was flying in the face of Providence. But the excellence of the principle triumphed; and, although one uniform rate prevailed for the sick and for the sound, for the old and for the young, the Amicable succeeded. The pale face of theinvalid was no objection; the purple hue of him who fared sumptuously was no preventive. The man on the brink of the grave, and the youth on the verge of manhood, paid the same premium; and for £5 per cent. per annum, and £7 10s.per cent. entrance-money, every one was enabled to insure his life. Such was the primitive plan of the first life association.

The London Assurance and Royal Exchange corporations followed, in 1720. In 1762, the Equitable was established; and, although a trifling progress was made, the clumsy plan of equal payments, without reference to years, was perpetuated, and five per cent. paid by all. When, however, the rates were varied in proportion to age, when sick men were rejected, and only the healthy taken, a step was made in the right direction; and life assurance began to flourish with a vigor which astonished even its promoters.

It is believed that England is the only state in which the insurance of lives has never been prohibited. The Dutch, a commercial people, refused to legalize it until a recent period; and in France it was long deemed unlawful, “because it is an offence against public decency to set a price upon the life of a freeman, which is above all valuation.” Another great objection was the fear that individuals might destroy themselves to enrich their families; and though this exaggerated view of the case is provided for in modern policies, yet the following anecdote will prove that the fear was not altogether groundless. So early as the middle of the eighteenth century, the clause which excluded the representatives of suicides from a participation in the amount insured excited attention; and an office was established, which, for a corresponding increase of premium, paid the amount to the relatives of the self-murderer. One man, deeply in debt, wishing to pay his creditors, and not knowing how, went to the office, insured his life, and invited the insurers to dine with him at a tavern, where several other persons were present. After dinner he rose, and addressing the former, said, “Gentlemen, it is fitting you should know the company you have met. These are my tradesmen, whom I could not pay without your assistance. I am greatly obliged to you; and now——” Without another word he bowed, pulled out a pistol, and shot himself.

The number of insurances was, at first, necessarily very limited; the mode in which the directors transacted business, the premiums they required, the determination to take none but lives which were almost faultless, the pernicious plan of occasionally resisting the payment of policies, the absence of much opposition, all tended to reduce the business. When, however, the capital of the country increased, and men looked earnestly about them for new modes of investment, the profits and the principles of life assurance were anxiously investigated, its demands inquired into, its difficulties overcome; and though from 1706 to 1806 nine offices had been found sufficient, yet from 1806 to 1846 the desire spread so rapidly, that no less than one hundred and eleven were established. In 1820, there were only twenty offices in the United Kingdom; in 1830, their number was exactly doubled; in 1840, they had again doubled; and from 1840 to 1845, they increased in the same proportion.

The success which has attended these companies has induced capitalists to invest their money in similar schemes, and the result has been, that during every period of excitement new associations have been started, with new claims to patronage. Those claims were put prominently forward to benefit themselves; and life assurance companies cannot greatly benefit their promoters without benefiting others. The constant advertisements, the names of their directors, the statement of their terms, the peculiarity of their constitution, pressed upon general attention, the public mind gradually became possessed with the idea that life insurances were for every class, and business increased. Every objection was met, every demand grappled with; and there is now, probably, not a man in London who cannot, in a smaller or greater degree, provide for those he may leave behind. The principal offices were proprietary; and the entire gain went to the shareholder. But the insurers began to see that the profits made by a corporation might as well be made by themselves; and companies which joined the proprietary with the participating principle followed. Another movement was that which divided the entire profits among the assured, reducing the premium as the company prospered; and so thoroughly is the value of life understood, that a society, commencing on this plan, with fair premiums and fair management, is as safe as a company with a capital of half a million.

But there were other difficulties to be met, as a pernicious plan obtained of disputing the payment of policies when the life fell in, on trivial and often unjustifiable grounds; the advantages of the system being greatly reduced owing to the desire for gain of the proprietary offices. To meet this, a society is now established, termed the Indisputable, which holds the policy inviolable when once granted.

There still remained one class for whom life assurances were unavailing. The anxiety for profits of the companies, the determination to divide good dividends, the extreme desire to take none but unexceptionable lives, produced an evil, at first view, irremediable. The stringent regulations, the declarations required, the personal examination, and the private inquiry, produced an unhappy effect. Average lives were declined, and for him whose health was not perfect, there was no chance. The healthy, but nervous man, whose pulse, when examined, beat like a steam-engine, was very often refused; and stories of rejected applicants, which speak volumes, are prevalent. One gentleman was declined because he was deaf, as he ran more risk of being run over. Another was refused because he had been three times bankrupt, and his system might have suffered. A third was too full of health, and might die of apoplexy. A fourth was deficient, and might die of decline. The old companies were absolutely determined to take no life but what was unexceptionable. The consequence was, that men in rude, robust health, if blind in one eye, or deaf with one ear, were often rejected; and there are innumerable instances of the refused party living to a good old age; while cases are not wanting, in which, after outliving doctor, actuary, and half the board of directors, the very man who, thirty years before, was refused at any price, was gladly taken by the same company at the ordinary premium.

The possessor of sound health, who has provided for his family, cannot comprehend the misery occasioned to the invalid by the conviction that his application will be rejected; and in a country where men labor long in an impure atmosphere, there are too many whose lives are early damaged. To these, every allusion to life assurance was an agony; and it is difficult to enter thoroughly into the distress of him who knew he would die penniless, when a sudden sickness possessed him. Unnerved both mentally and physically, he saw his last hour approach. Loathing the trifling luxuries which sustained him, because they would impoverish his family; dreading the footsteps of the physician, as he thought of his fee; the love of his wife was no comfort, the voices of his children no pleasure; for he knew that his death would leave them to public or private charity. Such was the position of the individual rejected by a life office.

But even this want has been responded to. Many offices now profess to take invalid lives at an increased premium; and two are really devoted to this particular risk. The Invalid and Medical Life Assurance Company first began, and was successful; and the Gresham, lately established, has proved that the class for which it is specially intended is numerous. Much may depend upon the judgment of the medical officer; but so great is the anxiety to insure, that the premium is of less importance to the insured than in ordinary cases, and the office is able to protect its interest. The idea has been supported and approved by actuaries generally. The success of the Gresham is a proof of its merit. Every man of feeling must cordially agree in the principle; and the speech of Mr. Marshall, cashier to the Bank of England, is one of many proofs that the insurance companies, a quarter of a century ago, were ignorant of their own interests.[12]

“I myself,” said that gentleman, “fell under the class of declined lives, and for the whole of my life have been deprived of the advantages which are offered by life assurances. One-and-thirty years ago, I had the misfortune to break a blood vessel in my lungs, and had I proposed to any office, that fact, as an honest man, I must have stated, and that statement would have caused my rejection. From that time to this I have enjoyed perfect health, and I stand before you this evening, a strong and healthy man, a living example of the value of this society, and I present to you a fact, to show that this is likely to be a profitable investment.”

Another society deserves notice, from its admirable plan of uniting a benevolent principle with the benefit derivable from life assurance, and from its addressing a class, to the families of which life assurance is the only barrier against absolute poverty. That class has been hitherto but little thought of, though there is none on whom it would be better bestowed,than on the clerks of England. Industrious, faithful, and intelligent, they are almost compelled, by virtue of their position, to maintain an appearance beyond their means. With incomes which just enable them to pay their debts, and which provide for no contingencies, they are to a great degree incapacitated from insuring their lives; and solacing themselves, therefore, with the idea that a small insurance would be of no avail, they feel that they cannot afford a great one. To this class, therefore, a society which specially provides for its wants is a great benefit; and a kindly feeling between the clerk on the one side, and his superior on the other, is encouraged, to the advantage of both, through the Provident Clerks’ Mutual Life Assurance Association.

Many instances might be given of the value of this society; and the writer trusts that the few lines in which he has honestly and earnestly indulged, for the sake of pointing attention to those offices which he deems deserving notice, may be regarded in the light in which they are written.

The cause of life assurance has occasionally received severe blows; and though, perhaps, less fraud has been attempted in these than in other companies, yet there is one instance of deception, so boldly planned and so successfully executed, as to stand out in strong relief in the history of life assurance.

About the year 1837, the provincial papers were filled with advertisements, drawing attention to the peculiar claims of the Independent West Middlesex Life and Fire Assurance Company. Its capital was stated to be one million; it was declared to be a legal corporation; and Acts of Parliament, dated from 1696, were boldly quoted. Cautiously did the promoters proceed in the metropolis, where they did not at first advertise, contenting themselves with establishing agencies in various parts of the country, and publishing advertisements in country papers. An imposing array of names as directors, declared to be of the first character and respectability, was promulgated; and when such names as Drummond and Perkins appeared in the list, the uninitiated believed the one to be the great banker, and the other the rich brewer, bearing the same names. To add to the delusion, the Bank of England was advertised as their bankers; and when they opened handsome premises in London, Dublin, Edinburgh, and Glasgow, the minds of the many were thoroughly deluded. Some notion may be formed of their intention from the fact, that they not only insured lives on smaller premiums than other offices, but gave larger annuities for smaller sums. According to their tables, a man of thirty, by paying £100, could obtain £8 yearly, and could insure his life at £1 15s.per cent.; thus making a clear interest of £6 5s.per annum.

The deed of the company—for, strange to say, it had a deed—was signed by any one who chose; and the law-stationer applied indiscriminately to all who came near him. Any one who asked for a situation was made a governor. A schoolmaster, who requested a clerkship, was made a director. An errand-man was employed as manager. A boy of sixteen was appointed to a seat at the board. One director had been tapman to a London tavern; another had been dismissed from his employas a journeyman bell-hanger; a third had been a gentleman’s servant; all had orders to dress well, to place rings on their fingers, and adorn their persons with jewelry; fines being instituted if they omitted to wear the ornaments provided.

The advertisements which blazoned the pretensions of the company, the puffing to which they resorted, the declaration that they had taken £40,000 in one year, together with the terms they offered, attracted that numerous class determined to get every thing cheap. Premiums to a large amount were procured by them, and they prospered.

The attention of the established assurance offices had long been drawn to these transactions; and it was known that a great crash must one day come; but they had not sufficient courage to declare the iniquity. It was left, therefore, to individual energy to expose their doings, and to individual resources to support the consequences. In March, 1839, Mr. Peter Mackenzie, editor and proprietor of theScotch Reformers’ Gazette, having investigated the question, and made careful inquiries which satisfied him of the nature of the company, commenced a series of articles in that paper, warning the public against transacting business with them. The task was difficult and dangerous; but it was boldly met, and skilfully supported. The following extracts from the journal of Mr. Mackenzie will show the earnest spirit in which he grappled with his task:—

“In a word, we raise our voice and warn the public to beware of this so-called Independent West Middlesex Insurance Company.” “It is a false and fictitious company.” “No better than a parcel of tricksters in London, disowned, repudiated, or condemned by every respectable person.” “Will the mere statement of a parcel of swindlers in their own favor entitle them to public favor, or secure public confidence?” “Nor shall we rest contented till we chase them out of every town and city in her Majesty’s dominions, or till they are fairly seized by the strong arm of justice.” “We defy the confederated band of swindlers, from the highest to the lowest.”

The wild fury of Mr. Mackenzie’s opponents may be conceived. They declared him to be a false and malicious calumniator. They published counter-statements, assumed the aspect of injured and of innocent men, and instituted separate actions against him for £12,000 damages. One of the agents had been in London, and had the audacity to state, on his return, that the deputy-governor of the Bank of England had personally assured him of the respectability of the association. Mr. Mackenzie, however, procured and published a denial from that gentleman; and this increased the hatred of the accomplices. Two thousand pounds were placed at the disposal of their law agents, to destroy Mr. Mackenzie, who appears to have been one of those not easily moved from a righteous purpose. He continued his articles, he continued to warn the public; and though, when the actions brought against him in 1839 were dismissed in 1840, they raised new suits, he persisted in his bold defiance, and did not hesitate one moment in the task he had undertaken. They could not, however, long conceal their practices; and one fine morning, the entire gang absconded, taking with them from the premises every article of furniture, after having realized, in four years, a booty of £250,000.

The distress which pervaded the middle and the lower classes was great. Applications to magistrates were frequent. Aged men, who had invested their all, went to the workhouse; servants, who had bought annuities with the savings of a life, were obliged to commence anew. Parents, who imagined they had provided for their children, were half broken-hearted. Day by day brought some new case, and day by day evinced the importance of being contented with a fair and legitimate percentage.

There is no knowing to what extent the evil might have reached had not the boldness of Mr. Mackenzie induced him to attack the Independent West Middlesex Company. The longer such an association lasts, the more numerous are its constituents; and to the above gentleman the thanks of the entire country are due, for performing, at a personal risk, and at a personal sacrifice of £700, a great public service.

The following extract from a letter, evincing the amenity of disposition and choice of language of the person who conducted the delusion, may prove an interesting close to the above narrative:—

“Thou art a scoundrel, and thy son no better. I give you and your lying rascal of a ——— notice, that if you or he should dare to publish any slander relative to my character, I shall instruct my solicitor to prosecute you, perjured scoundrel. You base wretch, swear against your own handwriting! What! swear you never borrowed any money of me for the office. O wicked wretch! I have your signature, and my solicitor has seen it. Base, base, base, base! Hang thyself with thy friend!“P. S. I have heard you have again plundered the office. O, how many times, you wretch!”

“P. S. I have heard you have again plundered the office. O, how many times, you wretch!”

FOOTNOTES:[12]The writer can add his personal testimony to the necessity of some such office. Twenty years ago, he suffered similarly to Mr. Marshall, and has since been debarred from the benefit of life assurance, although in possession of good average health. There are a thousand other cases; and the fact that the Gresham gradually increases in business, and has in the first year granted policies to the amount of £150,000, producing nearly £6,000 yearly, is very suggestive of the public requirements. The fact, also, that in such a company no death has occurred during the first twelve months, is honorable to the skill of its medical officer.

[12]The writer can add his personal testimony to the necessity of some such office. Twenty years ago, he suffered similarly to Mr. Marshall, and has since been debarred from the benefit of life assurance, although in possession of good average health. There are a thousand other cases; and the fact that the Gresham gradually increases in business, and has in the first year granted policies to the amount of £150,000, producing nearly £6,000 yearly, is very suggestive of the public requirements. The fact, also, that in such a company no death has occurred during the first twelve months, is honorable to the skill of its medical officer.

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