Read Ebook: Annals Anecdotes and Legends: A Chronicle of Life Assurance by Francis John Of The Bank Of England

Font size: 10 px 15 px 20 px 25 px 30 px 35 px

Background color: BlackWhiteGrayLight GrayDark GrayDim Gray

Text color: BlackWhiteGrayLight GrayDark GrayDim Gray

Apply/Save settings

Ebook has 423 lines and 79036 words, and 9 pages

Origin of the Doctrine of Probabilities. Essay of John de Witt. The Plague. First Bills of Mortality. Captain John Graunt--his Opinions, Life, and Estimates. Curious Terms in the old Registers--their Explanation. Life of Sir William Petty. His Career and Character Page 1

Practice of Assurance by the Romans. Saxon Approximation to Friendly Societies. Marine Assurance. Danger of Navigation, and its Effect on Life Assurance. Assurance for Palmers and Pilgrims to the Holy Land. Bulmer's Office of Assurance. Assurance of Navigators, Merchants, and Corporations. Uncertainty of Life. Annuities. Audley the Usurer. His History. Anecdotes concerning him. The Usurer's Widow 25

Judah Manasseh Lopez, the Jew Usurer. His Trick on the Duke of Buckingham. Suspicions concerning him. The Increase of London. Population of London. Proclamations. Halley's Movement in Life Assurance. His Tables 46

First Trial concerning Life Assurance. The Mercers'--its Establishment and System. The Sun--John Povey, its Projector--his Character. Wagers on the Life of King William. New Assurances. The Amicable--the Mode in which it was established. New Annuity Societies--Anecdotes concerning them--Close of their Career 56

Royal Exchange and London Assurance--their Rise and Progress. Bubble Era. Epigrams. Opposition to the New Companies. Accusations against the Attorney-General. List of Assurance Companies. Extraordinary Character of many. Remarkable Career of Le Brun. Directors in Trouble 72

Sketch of De Moivre--his Doctrine of Chances. Kersseboom. De Parcieux. Hodgson. Dodson. First Fraud in Life Assurance--its romantic Character. Thomas Simpson. Calculations of De Buffon 87

Rise and Progress of the Equitable--its Dangers and its Difficulties. Comparative Premiums. Sketch of Mr. Morgan--his Opinions. Singular Attempt to defraud the Equitable--Death of the Offender. Attempt of Government to rob the Offices 108

Bubble Annuity Companies--their Promises. Effect on the People. Dr. Price--his Life. Sir John St. Aubyn. The Yorkshire Squire--Assurances on his Life--his Suicide. 125

Fraudulent Annuities--Act to prevent them. Salvador the Jew. David Cunningham, the Scotchman--his Career--his Annuity Company--its Success--his double Character--his Fate. Mortuary Registration. John Perrott--his Passion for China--Trick played him. Curious Fraud. Westminster Society. Pelican 157

Legal Decisions. William Pitt, and Godsall and Co. Romance of Life Assurance. The Globe. New Companies. The Alliance--its Promoters. Improvement of the Value of Life consequent on the Improvement in Society--its Description. Trial concerning the Duke of Saxe Gotha. Important Legal Decision 176

Government Annuities--Opinions concerning them--Great Loss to the State. Mr. Moses Wing's Letter. Mr. Finlaison. New Annuity Act--its Advantages to Jobbers. Endeavours to procure old Lives. Anecdotes concerning them. Philip Courtenay 199

Fraud in Life Assurance Companies--its Extent--its remarkable and romantic Character. Janus Weathercock. Helen Abercrombie--her Death. Forgery of Wainwright--his Absence from England--his Return, Capture, and Death. Independent and West Middlesex--its Rise, Progress, and Ruin of all concerned 213

Select Committee of 1841. Instances of Deception. Publication of Accounts. New Companies--Assertions about them--their Importance--Suggestions concerning them 252

Extension of Assurance. Society for Assurance against Purgatory. Commercial Credit Company. Guarantee Society. Medical, Invalid, and General. Agricultural Company. Rent Guarantee. Railway Passengers. Law, Property, and Indisputable Societies. Disputed Policy 282

The Banker's Mistress. The elder Napoleon. The deceived Director. The murdered Merchant. The Corn Law League and the Cutler. The Unburied buried. The disappointed Suicide. A Night Adventure 295

Scotch Life Assurance. Scottish Widows' Fund--its Directors. North British. The Farmer's Fate. Edinburgh Life. List of Scotch Companies 317

ANNALS, ANECDOTES, AND LEGENDS OF LIFE ASSURANCE.

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

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

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

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

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

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

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

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

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

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

Of 100, there die within the first six years 36 The next ten years, or decad 24 The second decad 15 The third " 9 The fourth " 6 The fifth " 4 The sixth " 3 The seventh " 2 The eighth " 1

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

At the end of 6 years 64 " 16 " 40 " 26 " 25 " 36 " 16 " 46 " 10 " 56 " 6 " 60 " 3 " 76 " 1 " 80 " 0

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

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

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

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

Between 1604 and 1605, there died in London 5,135 " 1621 and 1622, " 8,527 " 1641 and 1642, " 11,883 " 1661 and 1662, " 15,148 " 1681 and 1682, " 22,331.

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

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

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

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

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

FOOTNOTES:

The title of this essay is "Waardye van Lyf-Renten naer proportie van Losrenten;" or, the "Value of Life Annuities in Proportion to Redeemable Annuities."

There was no just cause for surprise in these periodical visitations. The thinkers of the day understood the connection between cleanliness and health; and the following will show that such as these hit on the right source of pestilence:--

"I often wonder," says Erasmus in a letter to Dr. Francis, "and not without concern, whence it comes to pass, that England for so many years hath been continually afflicted with pestilence, and above all, with the sweating sickness, which seems in a manner peculiar to that country.... They glaze a great part of the sides with small panes, designed to admit the light and exclude the wind; but these windows are full of chinks, through which enters a percolated air, which stagnating in the room, is more noxious than the wind.

"As to the floors, they are usually made of clay, covered with rushes that grew in fens, which are so slightly removed now and then, that the lower part remains sometimes for twenty years together, and in it a collection of spittle, vomit, urine of dogs and men, beer, scraps of fish, and other filthiness not to be named. Hence, upon change of weather, a vapour is exhaled very pernicious, in my opinion, to the human body."

The first parish registers were kept in England in 1538, in consequence of an injunction from Thomas Cromwell. They had been kept for a long time previous in Augsburg and Breslau, though it was not till the beginning of the 17th century that they were general in Europe. It is worth mentioning, that long ere this, the paternal government of Peru kept a register of all the births and deaths throughout the country; exact returns of the population being made every year by officers appointed by the state.

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

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

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

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

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

Share on: WhatsApp @Hash Facebook Tweet