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.
It may be judged that life assurance was in operation by the latter
end of the seventeenth century, as a policy was made on the life of
Sir Robert Howard, for one year, from the 3rd of September, 1697. On
the same day in the following year Sir Robert died, and the merchant
refused to pay, on the ground that the policy had expired. Lord Holt,
however, ruled, that “‘from the day of the date’ excluded the day
itself, and that the underwriter was liable.” This appears the first
assurance on a life of which there is positive legal record.
Reference is usually made to the Amicable Society as the earliest
institution for the assurance of lives; but the Mercers’ Company, in
1698, commenced a scheme for granting life annuities to the nominees
of the assurers, in place of paying down a fixed sum. This was
undertaken at the instigation of Dr. Asheton, and its failure is
a proof that the duration of human life was very little known, or
that sufficient care had not been taken by the Mercers’ Company to
enable them to be annuity-mongers with half the success of Audley the
usurer, or Lopez the Jew. They formed something like a scale, but it
was incomplete. Married men, under 30, were allowed to subscribe but
100_l._; under 40, they might not subscribe more than 500_l._; under
60, they were limited to 300_l._ When this was commenced, it was
considered a very notable plan. It was thought that it would prove a
good business speculation, and, on considerable sums being subscribed,
“the Corporation rejoiced greatly.” It was soon discovered, however,
that the undertaking was founded on a mistake; so the first breach of
faith was in lowering the annuity. This proved insufficient, and the
company became unable to meet their engagements. They had fixed the
payments to their annuitants at the rate of 30 per cent., and now they
saw their funds almost annihilated by the error. At last they stopped
payment altogether; but the distress was so acute, that, recollecting
one or two forced loans they had made to the monarchs of England in
the troublous times of old, they petitioned parliament, in 1747,
for assistance. Their tale was a pitiable one: “At Michaelmas, 1745,
they found themselves indebted to the said charities, and their other
creditors, 100,000_l._; they were liable for present annuities to the
extent of 7620_l._; for annuities in expectancy, 1000_l._ a year more:
the whole of their income being 4100_l._”
The desired assistance was granted, and it need not be added that the
company is now one of the most flourishing in London.
If the principles on which the Mercers’ Corporation founded its
operations were erroneous, it must be considered that Government acted
as strangely in its public proposals for life annuities. Nothing can
illustrate more strongly the crudities of the science at this period,
than the fact, that when loans were raised by William III., on life
annuities, no greater annual amount was given to the man of seventy,
whose chances of life were so small, than to the man of thirty, whose
chance was so large. Thus, the State offered 14 per cent., at any age,
and it is curious that these proposals were accepted by very few. It is
true that interest was much higher than at present, but this does not
palliate the fact, that there was no attempt to vary the rate according
to the age.
Before approaching the next movement, it will not be out of place
to indicate the establishment of one or two offices which have since
added life assurance to that of fire. The Hand-in-Hand was established
in 1696, by about one hundred persons. In 1698 they framed a deed of
settlement, which was enrolled in Chancery. Ten years later, John
Povey, author of the “Unhappiness of England, as to Trade,” projected
the Sun. Finding his attempt very successful, Povey conveyed his rights
to certain purchasers, who, by a deed of settlement, of April, 1710,
erected themselves into the society now familiar as the Sun Fire and
Life Office.
It is not generally known that this institution printed, at first
weekly and then quarterly, a work which has since proved a valuable
addition to our historic literature. It was, indeed, a general custom
with insurance companies to publish periodical papers in aid of their
business, and was only another mode of that advertising which is so
liberally practised by those of the present century.
Mr. Povey, the founder of the above company, was a veritable promoter.
Not contented with establishing an office to insure against the chances
of fire, he invented also a scheme to extinguish it, and “Povey’s
fire-annihilator” was then a feature of the time. This gentleman, who
looked “a grave, honest-countenanced, elderly gentleman,” but is
described as “a meddling, restless, and turbulent spirit,” projected a
life assurance company for “4000 healthy persons, between the ages of 6
and 55,” to be called the Proprietors of the Traders’ Exchange House.
This, like many of his proposals, died a natural death. With those of
his class he was often in hot water, and was accused of plagiarising
the ideas of others. In addition to the offices of which mention has
been made, he formed the Society for Assurance for Widows and Orphans,
the progress of which is lost sight of. At any rate, he comes down to
us as the founder of one of the most liberal fire-offices in existence,
of the capital of which it may be remarked, _en passant_, almost as
little is known as of its projector.
The war which was undertaken by William, against France, produced a new
form of assurance: not only did wagers on his life become prevalent--a
betting which was but another form of insurance; policies were entered
into on the result of his campaigns. The conspiracies which were formed
against him increased the interest felt; and so uncertain were the
chances of his taking Namur, that 30_l._ were offered down, to receive
100_l._, provided the city and castle were captured before the last day
of September in 1694. At this period, also, a mutual assurance company
was formed to aid an adventurer with funds to raise a vessel which,
laden with the treasures of the East, had been lost on her passage
home; the peculiar feature of the transaction being, that, if any of
the association should die before the object was accomplished, their
share was to be transferred to the remaining adventurers.
The assurance merchants found their profits endangered in 1706, when
the Bishop of Oxford and Sir Thomas Allen applied to Queen Anne for a
charter to incorporate them and their successors, “whereby they might
provide for their families in an easy and beneficial manner.” The
application was successful, and the AMICABLE, an improvement on the
Mercers’ Company, obtained its charter, the number of shares being
limited to 2000. But that which appears most extraordinary was, the
mode of arranging the payments. The age of the shareholder--from 12 to
45--made no difference in his premium; and whether he were well, or
whether he were dying, was no consideration. Each person paid 7_l._
10_s._ entrance money, and 6_l._ 4_s._ per annum for life; but, as a
yearly return of 1_l._ 4_s._ was paid to each shareholder, the real
payment was 5_l._ The yearly number of deaths in London was about 1 in
20 at this period, and this fact probably originated the amount of
payment, though nothing could surpass the absurdity of a plan which
made no distinction between an old life and a young one,--between a
healthy and an unhealthy man. It is said that the Amicable had no
data; but Dr. Halley had already published his tables, and Vulture
Hopkins, or Mr. Snow the banker, or any money-monger, would have taught
the directors their error. It is true that success,--at any price,
almost,--was their object, and this was insured by the large payment.
It may be said, also, that it is wrong to judge of past actions by the
aid of present information; but common sense was as general then as
now, and any usurer’s books would have taught the Amicable its mistake.
The annual income, after deducting expenses, was divided yearly among
the representatives of those who had died. Thus a healthy year, with
only a slight mortality, made the division good; but in an unhealthy
year it was proportionably less. An annual distribution of this kind
was manifestly unsound, if not unfair; and must have been sometimes
severely felt by the representatives of the deceased. The Amicable,
however, may be received as the nursing mother of life assurance at a
period when, little as arithmetical economy was understood, it was
still less acted on.
Besides the attempt to engraft an annuity society on the Mercers’
Company, various minor endeavours were made, from 1690 to 1712, to
establish institutions which should grant yearly payments and pay
specific sums to the representatives of the deceased.
The principle of assurance, applied to other subjects than merchandise,
seemed a sudden light to those who had capital, and did not know how
to employ it; while it was a great boon to those who wanted money,
and did not know how to get it. The latter employed their wits in its
application to subjects which are not yet allowed to be legitimate;
and, while the former, with the praiseworthy caution of men who had
“put money in their purses,” went slowly but surely to work to found
institutions like the Amicable, the Royal Exchange, and the London, the
others did not hesitate to form societies, to frame rules, and to decoy
all they could meet, under titles as promising as their results were
ruinous.
In 1708 began what were then known as “the little goes” of assurance.
One was held at the Cross Keys, in Wych Street. We gather that each
person subscribed 5_s._ fortnightly, inclusive of policy, stamp, and
entrance money, on condition of 200_l._ being paid to his heirs and
executors. Another was an evident bubble, 5_s._ a quarter entitling
the subscriber’s representatives to receive 120_l._ at his demise;
while a third, called the “Fortunate” Office, was to provide marriage
portions of 200_l._ for those who paid 2_s._ a quarter. If contemporary
accounts are to be trusted, the ravenous appetite for assurance was
something like that which at the present day possesses projectors,
as offices were opened in every part of the town. If one company was
commenced to insure marriage portions, a second was sure to follow to
insure the portions of their children. A mutual life assurance was
instantly followed by a mutual ship assurance. The following notice
from the “British Apollo” will be found to illustrate this speculative
fancy:--“A first and second claim is made at the Office of Assurance
on Marriage, in Roll Court, Fleet Street. The first will be paid on
Saturday next; wherefore, all persons concerned are desired to pay
2_s._ into the joint stock, pursuant to the articles, or they will be
excluded. _The two claimants married each other, and have paid but
2s. each._” They were, however, to receive but 37_l._ Here is another
specimen: “Any person by paying 2_s._ at their entrance for a policy
and stamps, and 2_s._ towards each marriage but their own, when the
number is full, will secure to themselves 200_l._; and in the mean
time, in proportion to the number of subscribers.” This undertaking was
found to answer so well, that many others opened in the same line--one
of them, appropriately enough, in Petticoat Lane. Soon after this,
appears an advertisement from a baptismal office of assurance, where
every subscriber paid 2_s._ 6_d._ towards each infant baptized, until
he had one of his own, when he was to receive 200_l._, “the interest of
which is sufficient to give a child a good education; and the principal
reserved until it comes to maturity.” Most of the projects were systems
of wholesale robbery. For a time, however, they were greedily run
after. “The success of these schemes,” says a chronicler of the time,
“sharpened the invention of the thrifty, and immediately almost every
street in London abounded with insurance offices, where policies for
infants three months old might be obtained for short periods. From
these, they diverged into other ages and various descriptions of
persons.”
Emblems were placed in windows indicating the allurements of the
“Golden Globe.” Tempting advertisements were inserted in the journals
to show the especial advantages of a new Tontine. Infant or adult,
married or single, were addressed in, “The Lucky Seventy, or the
Longest Liver takes all;” while, paraded in promising forms, and
painted in bright colours, arose societies to keep the subscribers when
they married, and pay for their burials when they died.
There is something very painful in the recollection that the sufferers
were those who could least afford it. It was not the grasping Hebrew
who invested from his full store. It was not the wealthy East Indian
director, the rich alderman, the over-fed citizen, or the “new-fangled
banker” who lost a small portion of his gold. It was the poor and
thrifty man, who, denying himself to secure his children a provision,
was involved in loss.
Policies and premiums were in the mouths of all. It was the El-dorado
of the London craftsman, the alchymy of the needy tradesman. The
philosopher’s stone seemed placed before the class that least dreamed
of grasping it: but it was the realisation of the legend in which the
dreamer awakes and finds his golden pieces are turned to slate; it was
the arousing of Analschar from his gorgeous vision.
The jobbers of Change Alley were not behind; the members of Lloyd’s
entered keenly into competition, usurers trembled with delight at
the prospect of increasing their store, and annuity-mongers threw
themselves with ravenous rapacity on the unwary. Under the name of
Africanus, Steele selects a well-known character of the day to satirise
the “bites and bubble-mongers” of 1710, in “one who has long been
conversant in bartering; who, knowing when Stocks are lowest it is the
time to buy, therefore, with much prudence and tranquillity, thinks it
the time to purchase an annuity for life.” “Sir Thomas told me it was
an entertainment more surprising and pleasant than can be imagined, to
see an inhabitant of neither world, without hand to lift, or leg to
move, scarce tongue to utter his meaning, so keen in biting the whole
world and making bubbles at his exit. Sir Thomas added, he would have
bought twelve shillings a year of him, but that he feared there was
some trick in it, and believed him already dead.”
There is some confusion between annuities and assurances; it is an
evidence, however, that the public attention was pointed to the
tricks which were current. During this period, there is no trace of
any life-office; but it would appear that the Bills of Mortality were
regarded with interest, from a paper in the “Guardian” being founded on
them, and that they were so regarded is most probably to be traced to
their connection with assurance. The following is an extract from a
quizzical paper bearing on the mortuary registers. Died
“Of a six-bar gate 4
Of a quick-set hedge 2
Broke his neck in robbing a hen-roost 1
Surfeit of curds and cream 2
Took cold sleeping at church 11
Of October 1
Of fright in an exercise of the train-bands 1.”
Addison also composed the following bill of mortality in a paper “On
Dying for Love;” and it is a further proof of the attention paid to the
subject, that this great writer took it as a model:--
“T. S. wounded by Zelinda’s scarlet stocking, as she was stepping out
of a coach.
“Tim Tattle killed by the tap of a fan on his left shoulder by
Coquetilla, as he talked carelessly with her at a bow-window.
“Samuel Felt, haberdasher, wounded in his walks to Islington, by Mrs.
Susanna Cross Stitch, as she was clambering over a stile.
“John Pleadwell, Esq., of the Middle Temple, assassinated in his
chambers, the 6th instant, by Kitty Sly, who pretended to come to him
for advice.”
After 1712, these projects ceased to be placed before the town; and
the following odd “bite” had its share in dispersing the hungry crew
who proposed them. “There has been the oddest bite put upon the town
that ever was heard of. We having of late had several new subscriptions
set on foot for raising great sums of money for erecting offices
of insurance,” &c.; “and at length some gentlemen, to convince the
world how easy it was for projectors to impose upon mankind, set up
a pretended office in Exchange Alley, for receiving subscriptions
for raising 1,000,000 of money to establish an ‘effectual’ company
of insurers, as they called it: on which, the day being come to
subscribe, the people flocked in and paid down 5_s._ for every 1000_l._
they subscribed, pursuant to the Company’s proposals; but after some
hundreds had so subscribed, that the thing might be fully known, the
gentlemen were at the expense to advertize, that the people might have
their money again without any deductions; and to let them know that
the persons who had paid in their money contented themselves with a
fictitious name set by an unknown hand to the receipts delivered out
for the money so paid in, that the said name was composed only of the
first letters of six persons’ names concerned in the said scheme.”
For a period the people had rest from new propositions: as it was found
necessary to stop these offices for insurances on marriages, births,
christenings, and annuities, and to close the career of gentlemen
without a penny; this being done by the insertion of a clause in an
Act of the 10th of Queen Anne, enacting a penalty of 500_l._ on the
promoters of such societies.
Unfortunate as these bubble assurance companies might be, unformed and
unintelligent as their conductors proved, and ruinous as they were
to the people who trusted them, they were a movement in the right
direction. The principle of life assurance is so eminently social,
and so important to those who wish to invest their savings for their
successors, that any effort or endeavour to move this science from
the hands of usurers and speculative merchants was to be rejoiced at.
Hitherto it had been entirely in the hands of the monied man. Many had
been honourable in their dealings, but they were ignorant of the trade
in which they invested their money, while a bad business year or the
destruction of a fleet,--a civil war or the arbitrary demands of a
monarch,--might ruin alike assurer and assured.
Others who traded in it were harpies; who took advantage of the wants
of the applicants, who measured their terms by the requirements of
their customers, who demanded to the last penny, and claimed on the
earliest day. Such men did more harm to the feeling of security in
these transactions than can now be possibly imagined; but the above two
classes only could supply the requirements of the people in the early
annals of annuities and assurance.