Insurance

of Life

ISRAEL C. PIERSON,

Ph. D., of Washington
Life Insurance Co.

A century and a half ago the subject of making provision for one's family, by some form of life insurance, was quite generally considered among the people of the then colonies. The first definite action was taken when, in 1759, a life insurance company, now called the "Presbyterian Ministers Fund,' was incorporated by the Proprietaries of the Province of Pennsylvania, to insure annuities for the benefit of the widows and orphans of clergymen of all churches governed by elders. During the succeeding eighty years several other companies were chartered to sell annuities and transact life insurance business, including the Protestant Episcopal Corporation in 1769, the Pennsylvania Company for Insurance and Annuities in 1812, the Massachusetts Hospital Life Insurance Company in 1818, the New York Life Insurance and Trust Company in 1830, and the Girard Life and Trust Company in 1836. These ventures, although conservatively conducted, were necessarily tentative and experimental.

in the United States.

At the end of the period mentioned above, as nearly as can be ascertained, there were in force about 100 annuities and 550 policies, insuring $1,250,000. Excepting the pioneer, these early companies several years ago practically discontinued transacting life insurance and annuity business.

It is within the past sixty years that the vast business of life insurance in the United States has been developed. The experimental stage was ended and the era of advance was opened when, in 1843, the Mutual Life Insurance Company of New York began business, its first policy having been issued on February 1 of that year.

Since then a large number of life insurance companies have been established. The following list includes those now transacting business which had their inception between 1843 and 1860, inclusive, arranged according to the date of the first policy issued:

How life insurance has progressed since the early part of 1843 is shown in the subjoined table, by periods of years as indicated:

1. The New England Mutual Life Insurance Company was chartered 1835, April 1. 2. The insured under Policy Number 2, Mutual Benefit Life Insurance Company, issued 1845, May 20, life, $1,500, having attained in 1898 the age of ninety-six, the tabular limit by the American Experience Table of Mortality, the Company paid to him the amount of the policy in full.

3. Mr. William E. Starr, the nonogenarian member of the Actuarial Society of America, has been the Actuary of the State Mutual Life Assurance Society ever since 1848.

4. It is a curious coincidence that the holders of Policies Numbers 1 and 2, respectively, issued by the Berkshire Life Insurance Company, 1851, October 27, then residents of Pittsfield, Mass., after having paid premiums for thirty-seven years, both died in the same year, 1888, the first on March 28, in Platteville, Col., residence, Chicago, Ill., and the second on May 22, in Kenosha, Wis., residence, Pittsfield, Mass.

The companies did not have any tabulated American Mortality Statistics, but, as the habits and conditions of the people and the climate of the United States were similar to those of Great Britain, they concluded that the tables in use in the latter country would apply to conditions in the United States. They therefore employed for premiums and reserves the Northampton, Carlisle, Combined Experience, and other tables, modified in some cases by observations in this country. For the Annuity charges in "The Presbyterian Ministers' Fund," the plan of the Church of Scotland was followed.

"

The president of the New England Mutual, in "Reminiscence, 1847-97," says: "In determining the basis of premiums for the company, the rates of mortality given by seven tables were compared," including one which Professor Edward Wigglesworth, of Harvard University, made up from records in healthy portions of Massachusetts, and published in 1789. It was the table used by the Supreme Court of Massachusetts in calculating present values of estates and interests of heirs. The premiums of this company were an average of these seven tables. The mortality table compiled by Professor Wigglesworth seems to have been the first American table used at all for calculating life contingencies.

5. Mr. Benjamin F. Stevens became associated with the company in 1847. He has been the president since 1865.

In 1859, "Mr. Sheppard Homans, the Actuary of the Mutual Life, investigated the fifteen years experience of the company and constructed a mortality table which, after subsequent adjustment, became known as the "American Experience Table of Mortality." It was soon after adopted by the State of New York and by many other States as the official standard. The State of Massachusetts, early in the year 1900, adopted it as the standard for valuation of future business. The table may now be called the universal standard in the United States for calculation of premiums, for valuations and for the distribution of surplus. The construction of this table was the first considerable step in the progress of the Science of Life Contingencies in the United States. It is the basis of many volumes of commutation tables, tables of premiums and of reserves for a large variety of forms of insurance.

State supervision was introduced in 1856 by the State of Massachusetts. The Actuary of that Department, Hon. Elizur Wright, afterward Insurance Commissioner, made a valuation for November 1, 1859, by the Combined or Seventeen Offices' Experience table, at four per cent. interest. Since then all of the States have established Insurance Departments and the valuations have been made at December 31 of each year. The State which requires the highest standard of reserve establishes the rate for all of the companies. Recently the state of Massachusetts adopted a three and one-half per cent reserve by the American Experience Table, to take effect and to apply to all policies issued on and after January 1, 1901. Many of the companies, however, have for several years been computing reserves on new business upon a basis of three per cent or three and one-half per cent interest, American Experience Table.

More than 400 kinds of policies of forms of life insurance have been devised and used in order to promote the business and meet the various desires and circumstances of insurers. The calculation of the premiums and the reserves for these multitudinous contracts require the best mathematical training, the highest actuarial skill and the soundest judgment.

Insurance,
Fraternal.

the year.

as

A form of life insurance which is well known, especially in English-speaking countries, is furnished by fraternities, known friendly societies in Great Britain. The first life insurance institution to be established in Great Britain, known as the Amicable Society, and established about 1690, was a fraternity, being a mutual association holding stated meetings and furnishing life insurance to its members only.

The original plan of the Amicable Society was as follows: Each member, without regard to his age at admission, or his age at the time of payment, paid into the society a certain sum of money each year. At the end of the year the money received was divided among the beneficiaries of members who died during

J. M. EMERY, M. D., Secretary of the Fellowship of Solidarity.

Thus the payment was definite, but the amount of the benefit indefinite. The society grew for a time so rapidly that it was soon necessary to limit the amount of the benefit, and afterwards many variations were made as to the form of both payment and benefit. After nearly a century of useful existence the Amicable Society adopted what are now known as "old-line" plans, but in consequence of the many changes the mortality remained excessive, and after almost a century and a half the society reinsured and retired.

There were many small friendly societies in Great Britain during the eighteenth century, but the movement reached its highest point early in thhe nineteenth century. Most of the societies were organized on plans copied from the plans of the Amicable Society, or on similarly unsound plans, and many of them failed, but some altered their methods of operation and have survived and flourished. The leading friendly societies are now on what is known as "old-line" plans in the United States, and hold reserves generally nearly, if not quite, adequate, according to the tables employed by them. Some of them are more than fifty years old, and hold large resources, in one case amounting to more than $15,000,000.

The forms of insurance furnished by these friendly societies are generally as follows, viz.: Protection against sickness, accident, permanent disability and old age, together with a small life insurance. Most of these societies have a lodge system, but not all.

In the United States fraternal insurance was introduced by "Father Upchurch," who some thirty years ago organized the Ancient Order of United Workmen. His original idea was that of a labor union or workingmen's association, with life insurance as a mere incident. The life insurance plan consisted of charging a flat assessment, the same in amount without regard to age at admission or attained age, to be applied to pay the current losses. These assessments were to be collected after the losses were incurred. This fraternity is still in existenc, and with a large membership, but its plans have been changed so as to charge according to the actual risk at the attained ages, as measured by a mortality table.

Many other fraternities were founded upon the flat assessment basis, most of which have either failed or reformed their plans. The only societies which now persist in employing it are some small local organivations.

Other societies were organized upon what is known as the "graded assessment plan," which means that they levied assessments, graded according to age at admission, but not varying in amount, as the risk of death increased with the increasing age of the member. Many very successful fraternities, so far as number of members is concerned, have been built up on this plan, which is yet in common use, though now being generally discarded.

Experience has shown that neither of the two plans mentioned can be permanently continued. In both cases the mortality of the entire membership bears eventually so heavily upon the younger members that the growth stops, and unless a change of plan is adopted the institution fails. This fact has been realized in recent years by the managers of all the fraternities. At first it was thought that a solution of the difficulty was found by a continuous growth or "new blood;" then by maintaining "an average age," then by means of "gains from lapses," but now the idea has been generally accepted by managers of fraternities that the only sound plan must be based upon recognition of the fact that mortality increases with age.

Some fraternities have attempted to meet the increasing mortality by means of an increasing rate of assessment, but as this rate of assessment becomes practically prohibitive at the higher ages it results in excessive mortality at those ages among members who remain, the good lives dropping out, which prevents any mortality table from applying.

Various modifications of the "step rate plan" have also been proposed, and some fraternities are now employing level premium plans also. They are more commonly using the National Fraternal Congress mortality table, which is believed to represent closely the average experience of well-conducted companies.

The volume of insurance in the fraternities of the United States is very great, being in excess of $6,000,000,000, and nearly, if not quite, as large as the insurance in the "old-line" companies. One fraternity also has as much or more insurance in force than any "old-line" company. Their assets are small, their plans hitherto, whether on one basis of assessment or another, being current cost plans, but they have conducted their business at so small an expense that it is generally thought that a change to a sound basis can readily be made, and that the advantages will still be, in the United States as in Great Britain, so great on account of economy of operation and convenience of payment that the fraternities can readily continue to compete with "old-line' insurance in the field.

The last development is the organization of two fraternities, the Fellowship of Solidarity and the Fraternal Reserve, upon "old-line" plans, binding themselves to put up the full legal reserve and charging premiums, payable monthly, sufficient to do so, but with a very small provision for expenses. These fraternities employ the American Experience Table of Mortality, the standard table in most States.

Towa.

Capital:
DES MOINES.

Iowa was originally included in the Louisiana purchase of 1803. The first white settlements were made by a French Canadian, Julien Debuque, who obtained a large grant of land in 1788 and built a fort at the site of the present city of Dubuque. In 1834 the territory now included in the State of Iowa was placed under the jurisdiction of Michigan and later under that of Wisconsin. On June 12, 1838, it was erected into a separate territory and then included a greater part of Minnesota and all of the Dakotas. On December 28, 1846, Iowa was admitted to Statehood, with the present boundaries. Its area 56,025 square miles, and in 1901 its estimated population was 2,267,000.

is

Iowa is primarily an agricultural State,

its manufacturing industries having increased but slowly in the past five years, and not having become consolidated in manufacturing centres. The interests are diversified and evenly distributed over the State. Formerly the manufacture of lum industry, but this has declined in and exhaustion of the timber lands.

Wholesale slaughtering and tant industry in the State, its of the value of the total products. cheese and condensed milk ranks and grist milling holds the third timber industry is the manufacture struction and repair shops, and the nents.

An industry peculiar to Iowa is from the shells of fresh water mus other rivers. While this industry tion is paid to the breeding of that the supply will soon be ex

No

At the session of the Legislature vide for the comfort and safety of tories. It requires that all ma plied with belt shifters or other purpose of throwing belts off on and that all geared machinery. tion shall be properly guarded. and no female under eighteen years machinery while in motion, and shall not be permitted to operate machinery of any kind. All facto belts or tumbling barrels for polish blowers and pipes of sufficient ca dust. It is made the duty of the this statute.

Gov. Albert B. Cummins.

ber and timber was the principal recent years, owing to the misuse

meat packing is the most imporproducts amounting to 15.6 per cent Factory manufacture of butter, second in importance, while flour place. Allied to the lumber and of planing mill products, car conmanufacture of agricultural imple

the manufacture of pearl buttons sels found along the Mississippi and is successful financially, no attenyoung mussels, and it is feared hausted.

in 1902 an act was passed to prolaborers and other persons in facchinery in factories shall be supsafe mechanical devices for the pulleys, wherever this is possible, saws and machines of every descripperson under sixteen years of age, of age shall be permitted to clean children under sixteen years of age or assist in operating dangerous ries using emery wheels, emery ing castings shall be provided with pacity to protect the laborers from State to enforce the provisions of

The State Democratic Convention met September 3, 1902, and rejected the Kansas City platform after much debate. the vote standing 344 in favor of its adoption and 384 for rejection. The platform they adopted declares in favor of tariff reduction and condemns the Philippine war. The Republicans at their convention in August heartily indorsed the Administration of President Roosevelt and called for a vision of the tariff schedule in all cases where it affords a shelter for a monopoly.

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The State Democratic convention was held at Des Moines, September 3. The principal issue before the convention was the wording of the plank with regard to the indirsement of the Kansas City platform of 1900. Ex-Governor Boies led against the adoption of the silver plank of this platform. At district caucuses held in the morning, it was decided by a vote of 7 to 4 that there should be no reaffirmation of the Kansas City platform, though a minority report was sent in. In the convention proper reaffirmation of the platform was refused by a vote of 384 to 344. The platform finally adopted declared in favor of tariff reduction and condemned the conditions in the Philippines.

The Republicans met in convention in August. The platform adopted contained a lengthy discussion of the tariff and asked for a revision of the schedule as it stands. It suggested that the people of Iowa wanted a revision of those schedules that were adopted to protect industries which no longer need protection, and that they were particularly anxious to see modification of the duties that affect the trusts.

Trrigation
in the

United States.

It is particularly appropriate that the centenary of the Louisiana Purchase should be commemorated by the inauguration of the great work of irrigation that is so soon to be undertaken under the new National Irrigation Law, for now that the Federal Government has decided to construct and maintain the necessary artificial waterways it will be possible to cultivate at least 60,000,000 more acres of land within the Louisiana tract, a condition which will add materially to the profit which the United States will derive from its great real estate transaction of 1803.

For a number of years, as the Western States and Territories have become settled and the cultivatable land has been taken up, the subject of irrigation has assumed a more important aspect. Gradually all the good lands have been exhausted by settlement, leaving only the arid and undesirable lands open to the public, until, in some parts of the country, the limit of population has almost been attained. As the natural result the eye of the western resident and land-owner has turned toward the great American desert and the possibility of making this uninhabitable tract available for habitation is a problem that has taxed both the ingenuity of the practical agriculturalist and the knowledge of the scientist. Again and again individuals and private corporations have attempted to grapple with the problem, but, while their efforts have not met with the most satisfactory results, so much has been accomplished, so many thousands of acres of desert land have been made to yield fruits of the soil in spite of climatic and other adverse conditions, that the practicability of a great and systematic plan of irrigation has been more than amply demonstrated.

In President Roosevelt's first message to Congress he urged the necessity of the passage of a law which would enable the Government to approach the problem of irrigation in a practical manner, and, acting upon his suggestion, and upon the actual experience of several members of the House and the Senate, both branches of Congress, during its last session, approved the law which now promises relief from this great obstacle which has so long stood in the way of Western progress. The arid lands, which require irrigation and which are to receive attention under the provisions of the

new law, are located in Arizona, California, Colorado, Idaho, Kansas, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington and Wyoming, and aggregate 550,000,000 acres. It is said, however, that of this immense tract only 60,000,000 acres can now be irrigated, as there is no known water supply that will reach the other arid sections. In other words, there are about 490,000,000 acres of arid lands in the Western States and Territories that cannot be made fruitful, but will always remain arid unless subterranean sources of water supply exist and are discovered. This, of course, is not impossible, as such water supplies have been discovered in several sections of the desert.

The Geological Survey has now devoted fully a dozen years to the systematic investigation of the irrigation problem, and the reports published by the department show that the expenditure of a small sum of money for artificial irrigation greatly increases the value of lands, and the private control of irrigation reservoirs has already proven a very profitable form of investment. In Colorado and Utah the reservoir systems are under co-operative control of the farmers, who make use of them. In this way those who derive the benefit of the irrigation works are able to keep the expense of their maintenance at a minimum point.

In nearly all the sections where irrigation is required there are State and Territorial officers who have all irrigation matters under their control. Colorado is divided into six irrigation divisions, each of which is in charge of a superintendent; Wyoming has four such divisions, and Nebraska has two. California formerly delegated irrigation matters to the State Engineer, but he has ceased to have jurisdiction over them and they are now under private control.

The first source of water supplies for all irrigation projects is naturally the rivers and streams which flow through the arid sections, but as these are few in number and cannot be depended upon, being liable to dry up completely in periods of drought, the Government proposes to drive many artesian wells in the desert in order that they may test the underground water supply. In many districts which appear to forbid irrigatlon it is possible that water may be found beneath the surface in such volume as to convert the surrounding desert into a fertile territory, and it is estimated that Government land now practically valueless may be so Improved by irrigation as to be worth at least $20 per acre. In Louisiana and Texas rice lands which were formerly dependent upon natural irrigation have been increased in value by artificial irrigation from $10 to $50 and even $100 per acre, while the cost of constructing a small irrigation system is scarcely more than $200.

It has been declared that the area of wheat lands in this country is now all under cultivation and that as there can be no further expansion the wheat supply must inevitably become too small for the country's needs; but it is believed that by having recourse to irrigation the time when there will not be enough wheat to supply the population will be postponed for many years. The experience of farmers in the arid or semi-arid regions shows that wheat will flourish in such sections if properly cultivated. There are a number of Russians in the arid sections of the West who seem to have solved the problem how to grow wheat with little water, and the varieties of that cereal which they have developed are said to be extremely hardy and of excellent quality, and with an extension of wheat acreage by irrigation there need be no cause for alarm as to the future of the world's wheat supply.

The transcontinental railroads have also done much to aid favorable irrigation action by Congress, for they are vitally interested in the development of these arid plains where they hold many millions of acres of land by virtue of the grants made to them by the Government when they constructed their lines across the continent. These tracts are now uninhabitable and consequently cannot be disposed of nor opened to settlement. Irrigation will change this condition, for it is estimated that in the section where no creature save the prairie dog now lives a population of nearly 50,000,000 may in time be supported. In other words, a population nearly two-thirds as great as the present population of the United States may find homes in the Great American Desert when it has been opened up to cultivation by irrigation, a prospect that suggests that, before the close of the present century, there may be cities among the Rocky Mountains greater than Chicago. Not only will the production of cereals be greatly increased by irrigation but cattle and sheep raisers will be equally benefited by it. The land available for ranges is limited by lack of natural water supplies and consequently there will be a desire on the part of stockmen to avail themselves of the new facilities for obtaining water for their stock by artificial means. It will also increase the supply of forage for cattle. In fact, every interest of the great western plains will be directly benefited by the new Government irrigation plan. The fear has been expressed that irrigation on such a scale as is contemplated by Congress will in some

way interfere with Eastern interests by making the West a greater competitor of the East in farm products, but it has been shown in refutation of that theory that while the irrigation plans appear revolutionary they are really not to be dreaded. In the first place it will require many years to put the projected plans in operation, for they are of such a character as will necessitate the most careful consideration before action is taken. Engineering works of such magnitude cannot be constructed in a day or a year, but will need many years for completion. Thus they will not be forced beyond the needs of the people whom they are to serve, and they are not now needed except in sections of the country that are already settled. As the population increases by immigration and otherwise the irrigation system will be extended, but as that will be a matter of gradual development, no alarm need be felt in any section of the country.

One of the most important features of the Federal irrigation plan is the effort to safeguard the interests of those who now own water rights on the streams and water ways which are to pass under the Government control. This is a matter that will engage the attention of the authorities at every step, for the subject is such a complicated one that titles to lands in the irrigated districts are in many cases likely to be affected by the action of the Federal officials. To prevent unnecessary hardship on that account will be one of the chief concerns of those who have the irrigation project under control.

The law which President Roosevelt approved June 17, 1902, provides that all moneys received from the sale of public lands in the States and Territories to be benefited by the law, except such as are reserved by previous laws for educational and other public purposes, shall be set aside as a reclamation fund to be used in the examination and survey of arid lands and for the construction and maintenance of irrigation works. and if there be not sufficient moneys realized from such a source, then the deficit shall be paid from the United States Treasury. All lands required for irrigation are to be withdrawn from public entry until they have been irrigated, when they are to be opened for settlement again. No right to the use of water for land in private ownership shall be sold for a tract exceeding 160 acres to any one landowner, and no such sale shall be made to any landowner unless he be an actual bona fide resident or occupant thereof, residing