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 100l.; under 40, they might not subscribe more than 500l.; under 60, they were limited to 300l. 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, 100,000l.; they were liable for present annuities to the extent of 7620l.; for annuities in expectancy, 1000l. a year more: the whole of their income being 4100l.”

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 30l. were offered down, to receive 100l., 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 7l. 10s. entrance money, and 6l. 4s. per annum for life; but, as a yearly return of 1l. 4s. was paid to each shareholder, the real payment was 5l. 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 5s. fortnightly, inclusive of policy, stamp, and entrance money, on condition of 200l. being paid to his heirs and executors. Another was an evident bubble, 5s. a quarter entitling the subscriber’s representatives to receive 120l. at his demise; while a third, called the “Fortunate” Office, was to provide marriage portions of 200l. for those who paid 2s. 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 2s. 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 37l. Here is another specimen: “Any person by paying 2s. at their entrance for a policy and stamps, and 2s. towards each marriage but their own, when the number is full, will secure to themselves 200l.; 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 2s. 6d. towards each infant baptized, until he had one of his own, when he was to receive 200l., “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

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 5s. for every 1000l. 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 500l. 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.