SCOTCH LIFE ASSURANCE.--SCOTTISH WIDOWS’ FUND--ITS DIRECTORS.--NORTH
BRITISH.--THE FARMER’S FATE.--EDINBURGH LIFE.--LIST OF SCOTTISH
COMPANIES.
For more than one century the life assurance companies of England were
sufficient for the requirements of Scotland; and, whatever opinion may
now be formed of institutions founded on the proprietary principle, yet
life assurance would have been still in its infancy without it. And the
reason is obvious. It was the great object of these societies to pay
the best dividend they could. To do this it was necessary to spread
their advantages far and wide, to appoint agents in the remotest parts
of the country, to familiarise the public mind with its principles, and
to advertise its benefits wherever a village or district was ignorant
of them. By 1812, however, a proposal was printed “for establishing
in Scotland a general fund for securing provision to widows, sisters,
&c., and for insuring capital sums on lives, to be called the ‘Scottish
Widows’ Fund and Equitable Assurance Company.’” The northern reader
may not be averse to review the early career of his favourite
institution.
Its prospectus rivals the mining advertisements of the present day.
The society was to be supported by 2 Dukes, 1 Marquis, 6 Earls, 2
Viscounts, 2 Lords, 2 Honourable Gentlemen, and 3 Baronets, as patrons
only. It boasted a Viscount as President. There were 4 Vice-presidents,
27 Honorary Directors, 15 Ordinary Directors, and 20 Extraordinary
Directors. Its tables were founded on the Northampton observations
of Dr. Price, and the presumption of improving money was at 4 per
cent. per annum. But though it was ushered in with so brilliant an
array of names, it would seem as though they of Scotland were not to
be thus tempted. It requires hard work to place a new company on a
proper footing, and as dukes, marquises, or peers are not usually hard
workers, it took three years before this company could commence its
operations; and while the little insignificant-looking prospectus which
announced its advent is dated 1812, the society itself, ultimately
attended with such brilliant results, was not able to commence its
operations till 1815. Its first constitutional meeting was marked by a
feature perfectly in keeping with the devotional character of Scottish
life; yet it is strange and almost startling to commercial England
to read that “the venerable and reverend Dr. Johnston, who presided
in a manner beautifully consistent with the exalted piety of his own
character and _the benevolent design of the institution_, opened and
consecrated the business by the utterance of solemn prayer.”
The difficulties incidental to mutual assurance beset the new
society. For a time its sole capital was 34_l._ 12_s._ 6_d._ The most
imminent danger must have been apprehended by its friends; and until
a sufficient fund was accumulated, an accidental death might have
precipitated its ruin. Its early records prove that great anxiety
existed, that various precautions were proposed, and that a natural
alarm overshadowed its progress. This fact is an exposition of the
chances which assurance companies on the mutual principle must run,
and of the dangers to which they are liable during any abnormal or
remarkable period, when with no capital subscribed to back them, a
plague in the shape of the cholera, or an epidemic like the small-pox,
may prove that figures are not facts, and upset the most elaborate
calculations or the most undeniable tables.
The difficulties of the first year were surmounted, and insurers
came to its support. Year after year it gathered strength, and the
following table, giving some idea of its progress for ten years, may
not be uninteresting to new companies:--
1818. 1821. 1824. 1827. 1829.
£ £ £ £ £
Annual prems. 2,500 5,100 13,000 22,000 27,000
Capital 3,500 15,000 50,000 95,000 130,000
Policies issued 68,219 140,000 380,000 620,000 770,000
A comparison was made between the English Equitable and the Scottish
Widows’ Fund during the first eleven years of each. In the English
Equitable the assurances were only 230,000_l._; in the Scottish they
amounted to 493,000_l._ The annual income of the former was but
9500_l._, of the latter 17,500_l._ The English Society, at the end of
eleven years, possessed an accumulated capital of only 29,000_l._,
while the Scottish boasted one of 72,000_l._ Such was the success
of an institution which could not even commence business for three
years after its advent, which began with a capital of 34_l._ 12_s._
6_d._, and which, by the evidence of its own manager, was doubtful
of its continuance for the first year or two of its existence. That
the Scottish Widows’ Fund has been serviceable to thousands, and that
it has stimulated other companies, is undeniable; but it is equally
undeniable that it is a mere trading institution founded on mercantile
principles; and though its managers may boast that “it is benevolent in
its objects, that it originated in no selfish views, and that it has
been the happy medium of diffusing comfort and security,” it must still
be borne in mind that such benevolence is scarcely compatible with its
interests; and when it is remembered that its meetings were solemnised
by prayer, the thought naturally occurs whether revenue or religion
prompted the exercises, and whether the quackery of trade was not mixed
with the fervour of worship. It is a financial company, governed by its
tables, guided by its physician, and ruled by regulations which are and
ought to be severely enforced. Such was the first mutual institution of
Scotland.
The first proprietary was in 1823, when the North British Fire Company
added life assurance to its ordinary business. A company with a capital
is often of much service to the cause of life assurance in any place
where it is newly introduced. Where a mutual society fears to expend
its money, a proprietary company will send its proposals to every
journal in the place; and by spreading its doctrines among a remote
but intelligent agricultural population--by giving an absolute safety
to the insured, by virtue of its capital,--it is often productive of
inestimable good. And at this period the notion of insurance was vague
and indefinite. In agricultural districts especially, even among the
most thoughtful, it was rarely heard of. One story will illustrate
this more than a hundred assertions. The agent of the Rock Proprietary
Company met in the north of Scotland with an intelligent man who farmed
some thousand acres. This estate he delighted to cultivate; and though
the period was long before that when science was employed by the
agriculturist, he invested all his profits in the estate he rented.
With great and proper pride he took the life assurance agent over his
land, pointed to his improvements, and boasted his gains.
When they returned to the farm-house, the agent, who saw that if his
host died, all that he had done would be for his landlord’s benefit,
only said to him, “You must have spent a large sum on this estate.”
“Many thousands,” was his curt reply.
“And if you die,” was the shrewd retort, “your landlord will receive
the benefit, and your wife and daughter be left penniless. Why not
insure your life?”
The man rose, strode across the room, and drawing himself up as if
to exhibit his huge strength, said, almost in the words of one of
Sir Bulwer Lytton’s heroes[33], “Do I look like a man to die of
consumption?”
The agent was not daunted--he persevered, explained his meaning,
enlisted the kindly feelings of his host, persisted in asking him how
much he would leave his family, and at last induced him to listen. They
examined his accounts, and found that he could spare about 120_l._ a
year. The village apothecary was almost immediately sent for, the life
was accepted, and policies were granted for 3000_l._
In less than nine months this man, so full of vigorous health, took
cold, neglected the symptoms, and died, leaving only the amount for
which he had assured his life to keep his family from want.
There is much in favour of life assurance in this little anecdote, and
there is much too in favour of the proprietary system, for a man like
this would not have risked his savings with a mutual insurance society.
The Edinburgh Life Assurance followed in 1823, having been originated
by the legal bodies in Edinburgh at the same time, and very much upon
the same principles, with the Law Life in London. The Scottish Union
ensued in 1824, the Aberdeen in 1825, and the Scottish Amicable in
1826.
It is one advantage of all new life companies that they assist in
forwarding a principle; and there is another feature in them. In most
other speculative societies, their failure produces very painful
results. A railway sees its capital spent, and is obliged to make
farther calls upon its proprietors. An unsuccessful canal company has
only the certainty of having fed and demoralised some thousands of
stalwart navigators in exchange for the ruin of its shareholders, while
the failure of a mine is the melancholy close of many a bright hope.
But it is not so bad with a life assurance company. The insured--except
in offices originated with a fraudulent design, such as the West
Middlesex--has never yet been deceived by the failure of a policy. To
take Scotland as an instance, many of the companies have not been able
to maintain their ground; but in no one case has the policy-holder
risked his premium or lost his assurance. Thus the Scottish Life, when
unable to maintain itself, handed its business to the Mercantile,
which then became responsible. When the Mercantile ceased to be
an independent company, it transferred its policies to the “Life
Association.” The “Scottish Masonic” and the “Bon Accord” business was
taken up by the Northern. In no instance, therefore, has any legitimate
company failed in its engagements. The public has never been
scandalised with tales and traditions of wrong and ruin. Nor has the
improvident man been strengthened in his improvidence, by being able to
plead losses which others have sustained. The progress of the science
in Scotland has been calm and equable. Throughout all her districts,
its agents are spreading a knowledge of its benefits. There are enough
and to spare of companies; and while giving the following list, it may
be remarked, that all the offices which are noticed below as having
transferred their business, were fairly and soundly originated. It is
highly creditable to Scotland, that directly they found they were not
successful, their business was at once handed over to other companies:--
Scottish Widows’ Fund (mutual). This was the
first life office in Scotland 1815