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.

The first meeting of the Equitable Society for the assurance of life and survivorship “was holden at the White Lion in Cornhill” in 1762, when only four assurances were effected. In the next four months their number did not exceed thirty; and so lightly were the prospects of the institution held by those having authority, that when the Attorney-General was applied to for an act of incorporation,—“I do not think the terms are sufficiently high,” was his intelligent opinion, “to justify me in advising the Crown to grant a charter.”

Such was the commencement of this institution. For many years prior, the Equitable had been struggling into being, aided by the lectures of “the justly celebrated Mr. Thomas Simpson,” but yet more by the strenuous exertion of Edward Rowe Mores, an accomplished antiquarian and an enlightened gentleman. To his “great pain and travel,” says the deed of settlement, “the society was indebted for its establishment,” and in return its promoter was made a director for life with an annuity of 100l.[11] Though its board of management included some of the first bankers and merchants of the day, yet then, as now, it seemed necessary to catch a peer of the realm to act as decoy, so Lord Willoughby de Parham, with no interest in its movements or concern in its affairs, was paraded before the public as patron and director, and at the end of two years was gravely thanked for the use of his name in maintaining the reputation of the novel society. It was probably, however, the working spirits, such as Sir Richard Glyn[12] and Sir Robert Ladbroke who took charge of its movements, and who were guilty of, or at any rate were responsible for, the double dealing which followed; for it is quite in keeping with the commercial integrity of the eighteenth century, that the directors, fearing its slow growth would injure its character, gave it the appearance of a more rapid advance, by adopting the unworthy expedient of calling the 25th policy the 275th, thus inducing the world to understand that the society consisted of 250 more members than its actual number. Thus the success of the Equitable institution may be dated from the mendacious employment of names, and from an absolute deception in the number of the policies. For many years, an utter indifference was exhibited by the policy holders about the concerns of the society. It was useless to advertise a general court, as a sufficient number to form a meeting did not answer to the call. Nor could a full court be procured until the cupidity of the members was appealed to, and five guineas were promised to the first twenty-one who should arrive before twelve o’clock. Then, and not till then, were the meetings properly attended; a fact which speaks loudly for the shrewdness of those who devised the scheme, and the avarice of those who formed the association.

The usual quarrels which depress young institutions, pursued the Equitable; and twenty-one persons who had contributed to pay the original expenses made a sudden claim of 15s. for every 100l. assured. This was resisted by the new members, and “kindled into a flame that might have destroyed the society, had not the moderation and good sense of Sir Charles Morgan and a few other sober-minded gentlemen allayed the fervour of the contending parties, and prevailed on them to enter into a compromise.” The natural result of this “flame” was to decrease the number of policies from 564 in 1768, to 490 in 1770, and it was some time before the assurances were again increased.

There were many reasons for its comparative want of success. There was an air of mystery about the Equitable which did not become a commercial institution, and which is now difficult to understand. In December, 1762, a solemn oath was taken by directors and actuary, “never to discover the names of persons making or applying for assurances,” as if some unimaginable disgrace attached to it. The terms, notwithstanding the learned opinion of Mr. Attorney-General, were enormous; for Mr. Dodson, taking the London Bills of Mortality from 1728 to 1750 as his foundations, produced premiums so high as to be almost prohibitive. He had, “for greater security, assumed the probabilities of life in London during a period of 20 years, which, including the year 1740, when the mortality was almost equal to that of a plague, rendered such premiums much higher than they ought to have been, even according to the ordinary probabilities of life in London itself.”

In addition, there were certain fantastic extreme premiums for fancied risks: there was “youth hazard,” “female hazard,” and “occupation hazard”! There was 11 per cent. placed on the premiums of “officers on half-pay,” and on persons “licensed to retail beer.” There was no capital on which to fall back, as with the Royal Exchange and London Assurance; and in addition, the original subscribers claimed all the entrance money for themselves, so that, altogether, it is no great wonder there was a lassitude and lack of vigour in the first few years of the institution. There was also probably more impediment in insuring with a company than with a jobber, as the underwriters would not be hedged with the forms and ceremonies which always surround a board of directors.

The following is a comparative statement of the premiums in 1771, with those now charged; and though the former may excite a smile, we must remember that up to this period there had been no attempt whatever to vary the payments in proportion to age, but that 5 per cent. was still the accustomed demand for youth and eld:—

In 1769, the continuance of the Equitable must have been very doubtful; and had it not been for Dr. Price’s treatise, which recommended it to public notice, it is possible that this beneficial institution would have been closed. Hitherto its actuaries had been men who knew nothing about their business. The first, Mr. Mosdell, was a simple accountant; its second, Mr. Dodson, son of the mathematician, possessed the name, without the acquirements, of his father; the third, Mr. Edwards, was sufficiently aware of his own incapacity never to trust to himself; the fourth was a vice-president, who knew about as much of the art as his predecessor; nor was it until 1775, when Mr. Morgan was appointed, through the interest of his uncle, Dr. Price, that any real progress was made. From this period a new era may be dated; and “the society, no longer going on from year to year in ignorance and terror, incapable of deducing any just conclusion as to its real state, became now, by its more intimate connection with Dr. Price, possessed of ample means for ascertaining that fact and forming its future measures on the solid principles of mathematical science.”

In 1776, as Dr. Price urged on the directors the necessity of decreasing the tables of premiums, declaring them to be exorbitant and absurd, the female and youth hazard were at once abolished; and in consequence of an examination of the accounts, all the payments were reduced one-tenth. In 1780, on the recommendation of the same gentleman, the Chester and Northampton observations of mortality were adopted as the basis of the premiums, with an addition of 15 per cent., because certain directors thought the doctor was lowering the character of the institution by lowering the charges. In 1786, however, this 15 per cent. was discontinued, and various additions were made to the policies, which, like the taste of human flesh to the tiger, stimulated the proprietors to ask for more.[13] At the next meeting, ignorance and avarice united to demand a repetition of the bonus; but the majority decided on investigating the affairs of the society, and so satisfactory was the result, that a further 2 per cent. was added. In another two years an addition of 1 per cent. of all insurances of an earlier date than 1795 was voted; but still the cry was “Give! give!!” from a few absurd and insatiable proprietors. Success continued to mark the progress of the society; and by 1815, alarm being manifested lest it should become unmanageable from its magnitude, a resolution was passed limiting the participators in the surplus to 5000. Decennial investigations were agreed to, and the Equitable maintained its brilliant career. Below is a tabular statement of its progress; but it would be unjust to close this sketch without a more special allusion to one whose name was connected with it for upwards of half a century. Mr. Morgan, nephew to Dr. Price, was, as his name would imply, a native of the principality. Although originally educated for the medical profession, he showed so great a tabular aptitude, and evinced so much facility in the acquirement of mathematical knowledge, that Dr. Price induced him to relinquish the profession of surgeon for the situation of actuary to the Equitable; his management of which, seeing it rise from a capital of a few thousands to many millions, was sound and judicious; and although the institution contained in itself the germ of its success, yet Mr. Morgan’s arrangements tended to raise it to a position of almost national importance. His mathematical attainments were of the highest order; he contributed important papers to our scientific publications; he wrote various valuable works on annuities; and many a reader will call to mind his last few appearances at the meetings of the Equitable, when, drawn from his retirement, he stood bravely up to oppose, with the experience of a long life, the rash innovations of greedy proprietors; when he alluded so modestly to his past services, and touched so feelingly on that great misfortune, the death of his “friend, associate, and son,” which had compelled him to leave his retirement and to appear in defence of those rules and regulations by which he had conducted the Equitable to a distinguished success.

At the present time the following warning of this “old man eloquent,” uttered at one of these meetings, may have an effect in staying the demand for decreased premiums, annual divisions, and half-yearly bonuses:—“Can anything be more absurd, or betray greater ignorance, than to propose an annual profit and loss account in a concern of this kind, or to regulate the dividend or the call by the success or failure of each year?... Exclusive of the immense labour of such an investigation, the events of one year vary so much from those of another that no general conclusion can be safely deduced from the experience of so short a term.”

A tradition is current that, very shortly after the establishment of the office, a fraud was discovered in time to save the society from loss and to hang the criminal for the attempt. A man named Innes induced his step-daughter to insure her life with the Equitable for 1000l. Soon after this she died, and in proper time Innes produced a will, duly signed and attested by her, making him executor and legatee. There were facts connected with her death which seemed morally to implicate him in a terrible tragedy, but there was nothing which could be brought home as legal proof. The character of the man, his eagerness to procure the money, the doubtful circumstances of the case altogether, made the assurers hesitate, and they took the bold course of refusing to pay, upon the ground that the will was not a genuine document. But the man whose character was bad enough to justify such suspicions, was not likely to lose his money for want of a few false oaths, so he produced upon the trial one of the attesting witnesses, who swore that the will was executed in Glasgow, and that he personally knew the other witness. As Innes, however, undertook to procure further evidence in his favour, the trial was postponed, and when it came on a second time every thing went swimmingly on in his favour. His two confederates, one of them was named Borthwick, were ready to swear anything and everything. The time, the place, the room, were minutely described; the scene was graphically painted; and they sat down satisfied that they had played their parts to perfection. But Innes was not contented: he wanted the thousand pounds; and resolved to “make assurance doubly sure,” another person was called, who was to clench the argument by proving that he saw the deceased person sign the will in the presence of the two men who had attested the signature. This witness appeared with fatal effect. Wan and ghastly he is said to have arisen in the witness-box, and well might he be ghastly who was about to peril a brother’s life! “My Lord,” he said, “my name is Borthwick. I am brother to the witness of the same name who has been examined. The will was not made on the Bridge-gate at Glasgow, it was forged by a schoolmaster in the Maze, in the Borough!” The trial immediately ceased: “a screw is loose,” said Innes, as in vain he endeavoured to glide out of court. Of the confederates in this base deed one graced the pillory, another was imprisoned, Innes himself paid the extreme penalty of life, the office escaping the meditated fraud.

It is said to be the boast of the Equitable that this was the only case in which they found it necessary to appeal to law.

Whatever defects may have characterised the constitution of this Society, it was a great improvement on the arrangements of the Amicable and the two proprietary companies. It did all that a legitimate life office could be supposed to do. It assured lives for any number of years, or for the whole continuance of life. It took the price of the assurance in one present payment, or it accepted annual premiums. It allowed annuities to the survivors if they preferred it; and though the scale might be too high for what we now know, it at least was more business-like than its contemporaries; for so slow were the latter to profit by experience, that it was not until the commencement of the nineteenth century that the Royal Exchange Corporation availed itself of the Northampton Tables to compute its premiums.

In 1779, Mr. Morgan produced his “Doctrine of Annuities and Assurances.” This gentleman was the first to detect the inaccuracy of the rules which Mr. Simpson with others had given to discover the value of contingent annuities, and which he himself had adopted in the above work. Notwithstanding the castigation he received from Mr. Baily, for his “loose and obscure manner,”—for the “grossest errors,”—for “distorting,”—for “enveloping in mystery,”—for “introducing a depraved taste in mathematical reasoning,” there is no doubt that his was the earliest attempt to give correct solutions on the various cases of deferred annuities which had arisen out of his experience in the Equitable.

The following additions were made to the policies of the Equitable by 1800:—

That a desire for the benefit of insuring was spreading, and that the commercial relations of the Continent were increasing, may be traced in the fact that in 1765 his Prussian Majesty granted letters patent for establishing a chamber of assurance in Berlin for thirty years, during which period no other assurance office was to be allowed in any part of Prussia; and during the same year, the free city of Hamburg established a company for the sale, not only of immediate, but of deferred annuities.

In 1765, one of those insolent attempts occurred on the part of the state, which reminds the reader of an absolute, rather than of a representative, government. The peace concluded in 1763, followed a war which cost upwards of a hundred millions, and the bribery which was necessary to carry the treaty through the House, had contributed to exhaust the treasury. Money was to be acquired, and the people grumbled at the taxation necessary to raise it. In this dilemma it suddenly occurred to the ministers that there might be unclaimed property in the assurance offices, and by some confusion of right and wrong it was thought just to claim this private property for the public good. Nothing could more decidedly approach confiscation. But in dealing with these offices the government was dealing with a large and influential body of proprietors whose gains were aided by this “dead cash,” and who were not men to see their purses invaded with impunity. The Amicable, the Royal Exchange, the London and the Equitable Assurance Companies numbered among their shareholders the greatest mercantile names of the day; they were the same men, or of the same generation, who as directors or as proprietors of the Bank of England resisted, a few years later, the just demand of William Pitt for the unclaimed dividends on the national debt; a demand so obviously sound that its opponents had not an argument to support their refusal. If, then, they were so vigorous when wrong, it may be imagined that they stood boldly forward when they were right. Their courage was undaunted, and they positively defied the claim. The Whigs declared that it was as barefaced as shutting the Exchequer by the Second Charles; the Jacobites said they might as well have a Stuart as a Guelph, that the minister had mistaken his men, and that under no circumstances would they voluntarily yield. Pamphlets were issued, which distinctly asserted that no one would trust a government acting so infamously; that confiscation of private property to pay a nation’s debts was only one remove from bankruptcy; and that no citizen would lend money to a government so unprincipled. The propriety and proper feeling of the people aided the resistance of the offices, and the attempt was only successful in proving to the state, that all arbitrary power had past away, and that for the future an honest course would be their best policy.