We are warranted, therefore, in asserting, without qualification, that the law of mortality has been ascertained so accurately from sufficient data as to admit of the most confident reliance on its general operations.

These various materials have been from time to time rendered subservient to important uses and applications by those philosophers and writers who have devoted their attention to the study and development of the science of Life Probabilities. To Dr. Halley belongs the credit of first unfolding a general formula for calculating the value of annuities, whereby he supplied the germ of all subsequent developments of the science. De Moivre contributed greatly to advance the subject, although the hypothesis on which he proceeded was soon found to be incorrect. Thomas Simpson and James Dodson, in their several works, aided in extending the application of the facts and laws of mortality, as then ascertained, to many useful purposes, and especially in promoting the business of Life Assurance. The successful and patriotic labours of Dr. Price, in destroying the bubble schemes set afloat during the latter half of last century, are known to many, and deserve ever to be held in honourable remembrance. The publication of the fourth edition of his work on Annuities and Reversionary Payments, in 1783, with the valuable tables which enriched it, marked the commencement of a new era in the business of Life Assurance. Mr. Morgan's labours, both in the business and authorship of Life Assurance, are still remembered in connexion with the London Equitable Society.

Francis Baily, in 1810, published a work on Annuities, distinguished by scientific beauty, and calculated for daily use in the business of Life Assurance. A similar work, comprehending all that was valuable in previous writers, was produced in 1815 by Mr. Joshua Milne. The standard compilation of David Jones, published under the auspices of the Society for the Diffusion of Useful Knowledge, is now, perhaps more than any other work, in daily use by Assurance Companies. To a student of principles, however, we would recommend the simpler work of Baily.

It might be invidious, and it is not necessary, to notice and estimate in comparison the services of eminent actuaries of our own generation, such as Ansell, Finlaison, Davies, Neison, Edmond, and the Joneses, or to dwell on the contemporary authorship of such writers as Babbage and De Morgan, whose works will abundantly repay the careful perusal of any one desirous of fully understanding the theory of Life Assurance.

The first Life Assurance Society established in this country was the Amicable Corporation of London, founded during the reign of Queen Anne in the year 1706. Centuries before that time there existed in England ancient associations known as

History of Assurance Societies.

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gilds, fraternities, mysteries, and brotherhoods. These possessed more of the character of friendly societies than of Life Assurance institutions; but they discover even in the early developments of society those prudent and benevolent tendencies of the English community, which have rendered it in later times so favourable a soil for the cultivation of Life Assurance.

Anterior to the bubble schemes exploded by Dr. Price, only five Life Assuring Associations had been established in England. These earlier societies began by charging an annual premium of £5 per cent. on every life assured, without reference to ageso rude were the first ideas of the risk undertaken in a policy of Life Assurance. Even when they discovered how very rough and inequitable this mode of regulating the contributions was, the first attempts to graduate rates to the age of the assured were made upon calculations of the probability of life greatly below its actual value, while the premiums were still further enhanced by the ignorant, but perhaps wholesome jealousy of Government, which refused to issue licenses, (then much desired by the societies as a guarantee of their soundness,) because the rates were not considered sufficiently high.

From the publication of Dr. Price's work, before alluded to, until the end of the last century, there were instituted only two new Assurance Societies which survived any length of time.

Since the commencement of this century, companies and societies of all kinds have sprung up and flourished. From 1800 to 1810 inclusive, thirteen were established. For the next ten years till 1820, only four were set up. During the succeeding decennial period till 1830, twelve new companies attested the return of a fresh interest and impulse in the direction of Life Assurance. The next ten years, ending in 1840, were signalized by still more abundant evidences of the zealous cultivation of Life Assurance, no less than thirty-one associations having during that period effected a permanent establishment in the country. Since 1840 a still larger number have appeared. Altogether, the whole societies and companies now doing business in Life Assurance in the United Kingdom are about ninetythree. We say Companies and Societies; for under these generic designations may be classed all the proper Life Assurance Institutions. Society is the name appropriate to those associations which, composed exclusively of assuring members, depend on the contributions of those members alone for the fulfilment of their policies, and which retain, for the benefit of the members, all surplus funds arising from the excess of contributions. In short, the Society is constituted and worked on the principle of Mutual Assurance. The Company, in its pure, unmixed character, consists of an association of proprietors or shareholders

subscribing, and partially paying up, an aggregate capital on which they trade with the public (at least the healthy portion of it) in assuring lives at certain specified rates, thus affording to the assured the guarantee of a separate capital, but appropriating to the shareholders, in addition to the interest which that paid-up capital produces, the profit arising from their assuring trade. The Proprietary Companies now, however, with not more than one or two exceptions, offer to assurers the option of either paying merely the rate for which the Company is willing to insure the life, and so acquiring no after-benefit beyond the exact sum in the policy; or paying a somewhat larger rate, and thereby obtaining some participation in the profits of the business. Having thus introduced into their original proprietary constitution the more popular principle of mutual Assurance, they may be said with more correctness to belong to a new and mixed genus, partaking in about equal proportions of the proprietary and mutual elements. In fact, Life Assurance Associations are generally and familiarly classified under the three heads of "Mutual," "Proprietary," and "Mixed."

We shall not attempt to analyze or comment upon the various institutions which offer the benefits of Life Assurance to the public. This has already been done with a free hand by such writers as Babbage and De Morgan and their several reviewers. Neither shall we at any length discuss the merits of those measures by which such associations as the London Equitable have been managed to the great profit of a privileged class. These proceedings have already been canvassed until something very like unanimity on the subject prevails. We shall merely give a general view of the principles of Life Assurance, and of the advantages peculiar to different classes of associations, leaving our readers to exercise their own judgment as to the plan which appears to them most advantageous. It is desirable, and it is, moreover, high time, that the public should for themselves acquire a knowledge of the elements of the subject. The pretensions of rival establishments would then in some measure be subjected to an independent test; and public patronage, guided by better lights than puffing advertisements, would quietly and steadily move in the right direction.

We have already glanced at the foundation of the system, and seen that the force of mortality in this country has been ascertained, and may be relied upon with all the confidence which mankind repose in the operation of a general law. While, however, we hold that the law of mortality has been so well ascertained as to relieve both assurer and assured of all apprehension of any serious and disastrous mistake in the tables on which Assurance is conducted, the subject is one to which

continued attention should be earnestly and patiently directed, with the view of working out its minuter applications. There is still much to be done even in the best conducted institutions towards adjusting equitably the contributions of the several classes of their members. A vast advance has been made since the period when the youngest and most select lives were rated, without any distinction, with the old and infirm. But although the excessive and unequal charges of those early times of ignorance and over-caution have gradually given place to rates, generally speaking, graduated according to the ages of parties, there yet remains room for improvements in applying the facts of ascertained mortality, so as to do justice to the several ages of the assured; and, in the sale and purchase of annuities and reversions, to meet with more accuracy the different degrees of contingency.

Life Assurance is based on the principle, or rather on the fact, that human life, proverbially uncertain as it is in the individual, is in respect of a multitude of individuals governed by a fixed and well-ascertained law, in virtue of which it can be safely and accurately calculated how many of them shall die in each year, until the whole become extinct. Proceeding upon an ascertained or assumed rate of mortality, it is not difficult to find by calculation what single or annual payment by cach of a multitude of individuals would provide a certain specified amount to be paid over on the death of each. Money, however, does not, in a commercial community, rest a single day unproductive, and the interest to be derived for the use of the money while it remains in the common fund, thus manifestly forms the other main element, along with the rate of mortality, in determining the scale of premiums on which Assurances are effected by any association.

When a body of individuals associate together with the view of assuring lives, either on the plan of a Proprietary Company or a Mutual Society, the first thing to be done is to fix the rate of mortality on which their tables shall be constructed. It may safely be asserted that the Northampton Table has been proved to be erroneous, and that the associations which retain it in any department of their business, however prosperous and extensive, are in so doing clinging to an antiquated hypothesis which must operate in producing inequitable results to large classes of their contributors. The true rate of mortality is one which runs somewhere within the limits of the Carlisle, the Government Annuitants, and the English Life Table. These, along with information derived from experience in regard to assured lives, afford a correct and satisfactory basis on which to construct a table of mortality graduated so as to suit all ages; and were any parties

proposing to found a new institution upon an assumed mortality differing materially from these tables, we should not only be disposed to challenge their intelligence, but to doubt their integrity.

The next thing to be settled is the rate of interest at which the aggregate funds of the concern may be expected to be improved on an average of their whole investments. On this point it is impossible to set up a standard so sure and well ascertained as that which now regulates the rate of mortality. Limits, however, may be assigned, and if past experience could be relied on with absolute confidence as indicating what may be calculated upon for the future, it would not be difficult to fix the average rate at which all the calculations should be made. We shall not here start the question as to the probability of interest being perinanently maintained in this country. It is enough to state as facts, that hitherto the average of the investments of Assurance Companies have yielded a close approximation to five percent., and that the calculations of most of them are based on an assumption of three cent. per It is obvious that unless some great and permanent depression of interest shall ensue, and supposing the funds to be farmed with a fair degree of skill and attention, three per cent. may be confidently taken as the basis of calculation. It is equally evident, that, apart from considerations of a more general kind, as losses arise on investments of the securest order, and the chances of loss increase as the per centage rises, the assumption of more than four per cent. as a constant aggregate rate would be speculative and hazardous, and sufficient of itself to warn away the confidence of the public from any associations adopting it.

These two matters of fact-the rate of mortality and the rate of interest being ascertained and assumed, the groundwork is laid for proceeding to the business of actual assurance, and to all transactions in which the pecuniary interest of individuals is dependent on the value of life.

In every office additions are, of course, made to the net calculations to provide against contingencies and for expenses of management.

Applying to the proper data the formulæ evolved by mathematicians, tables have been constructed showing the price of assurances at all ages, both by single and annual payments of premiums; single and joint lives are appreciated in all modes of combination, and there is no species of deferred, contingent, or reversionary interest or expectancy which cannot be measured and valued with accuracy, so as to form the subject of purchase and sale. The variety of transactions so arising is very great, and the benefits consequently accruing to many whose interests