every hand to house the increasing population.

Fort William, from being a waste of cedar swamps, had become a huge gridiron of interlacing railway tracks, covered with miles of freight cars, busy in bringing out the season's crop; its grain elevaters had trebled in num ber, and huge ships were lying alongside, where, erstwhile, had only been the north-west canoes of the Hudson's Bay Company.

All along the main line of the C. P. R, from Winnipeg around the north shore of Lake Superior, curves had been straightened, the long, beanstalk trestles had been filled in, and solid earth embankments had taken their

place. Wooden bridges were replaced with steel, and the whole construction had been raised from temporary to permanent rank. New sources of traffic had been developed. Fishing industries had been created, and piles of boxes marked for Boston and the East, were ranked upon the station platforms, filled with the catch of the fishing fleets whose brown sails dotted the deep, sheltered bays. Mines had been opened, busy saw-mills were turning the silent forests into lumber, and villages were rising at intervals throughout. The master hand was still at work, and " Manitoba Revista " is best summed up by saying: "I have again seen Van Horne."

--

L

JOHN IMRIE.

MANY have been the hands that have written upon Life Insurance. It is to be profoundly regretted that upon this subject, as upon all others, many have uttered views the nature of which they did not comprehend. Many volumes would not contain the literature that has been given to the public of a most misleading character, or expressing views wholly at variance with the fundamental principles that govern Life Insurance. Many societies have been organized upon plans so erroneous, that one can hardly help thinking the promoters were wilfully deceiving the public.

Frequently there have been placed before the public schemes of insurance by which the members were to receive $1,000 in five, six, or seven years, for the small payments amounting to two or three hundred dollars. In one case, about $300 paid in by the members in annual portions, was to yield the member $1,000 in seven years. Now, it is really amazing that any body of men would have the hardihood to place such a scheme before the people; and it is equally surprising that persons could be found who would join such a society. Nevertheless it had its day of prosperity. The United States have been overrun by such societies. No doubt money has been made through these societies; but it went into the pockets of the dishonest and unscrupulous founders and organizers of them. The laws in the States and Canada are becoming more and more stringent, and it is to be hoped that we have heard the end of these frauds. By no conceivable means, either of gains from interest, and confiscation from lapses, could these small contributions be swelled into a thousand

dollars in the course of six or seven years.

But, if it is impossible, as bitter experience has taught many, to fulfil the glowing promises made by the promoters of these short term endowments, on the rates charged the members, so will it be equally impossible to meet maturing endowments at the expectancy of life where the rates collected are inadequate for the purpose. When the rates are insufficient, the only difference between a short term endowment and a long term endowment, is one of time. In the former, the race is a quicker one, and the stop is reached sooner than in the long range endowments. The fundamental error exists of insufficient rates, and insufficient income. No management, however good, can save a society, where the attempt is made of selling its insurance and endowment policies below cost. It would matter not how great the capital of a bank, if the directors decided to give interest on deposits and charge none on advances; ruin must overtake the corporation. The capital would be all used up in the foolish effort; and the ultimate depositors would lose, not only their interest, but their principal; for, after all other moneys had been used, deposits would be used to pay interest upon deposits until nothing was left, if the bank continued in existence for a sufficient length of time.

Life insurance cannot be carried on in any haphazard method any more than can banking. There are certain well known laws that govern the financing of a life office. One of these laws is the law of mortality. As the result of a vast amount of labor over a large field of observation, and carried on by many of the ablest authori

ties, a number of mortality tables have been constructed. These tables differ a little from each other; yet, for working purposes, they show a close and substantial agreement: and have enabled actuaries to form premium rates, as the cost of giving insurance to persons of different ages. By the tables of mortality it is seen that at the different ages the death rates vary, gradually increasing with increasing age. The premium must be so adjusted, for each age, that the contributions of every member shall be sufficient to meet death losses and provide for endowments, if there be any. This law is beyond the control of human agency. It is quite true that the death rate on persons newly admitted into a company or society, ought to be somewhat below the rates fixed in the mortality tables. This is the benefit of careful selection. But when a company becomes old and large, the proportion of new members is not so important in this respect as when it was younger, as they bear a smaller ratio to those already in than was the case in the early years of the company or society. Thus, when the company, or society, becomes old and large, the benefit from "new blood" is but slight.

Another law that must not be overlooked is that of interest. This is a question of great importance. In a company, with judicious premium rates, and estimating upon 4 per cent., at the outside, 4 per cent., on all reserves, the affairs may be regarded as satisfactory, unless some unforeseen loss is experienced in the investments. But when the premium rates are in adequate, and the accumulated reserves a long way below what they ought to be, there is a heavy annual loss on interest account. Take for example a society with a reserve of $1,000,000, whereas the reserve ought to be $2,000,000; and, computing at 4 per cent., the annual loss would be $40,000, in addition to the annual loss due to insufficient premiums. It does not need

much thought to see where such a state of things is bound to land the company, or society. Already, the shore is strewn with the wrecks of organizations in whose methods the above error of too low a premium rate had found a place. But some societies make the desperate attempt of carrying on a large insurance business, without reserve of any kind; and, consequently, without earnings from interest.

Some societies contend that a reserve is not needed. Its head men coolly say that a reserve is just that much money taken out of the members pockets more than was required to meet maturing losses. If anything could be proof of profound ignorance of the problems of life insurance, surely such contentions afford it. Taking a wide view of the field of societies carrying on fraternal work in Great Britain and the United States, it is found that the death rate ultimately reaches at least 12 per thousand. In many cases it has been much higher. When a society is old enough to contain members from the age of 18 years to 99 years, then the full swing of mortality will be experienced. In 1,000,000 members in American societies it has reached 12.42 per 1,000. In the Ancient Order of Foresters, Britain, it has become 12.14 per 1,000. In the Manchester Unity of Oddfellows, the death rate has attained 12.63 per 1,000. In a large mass of membership for other British friendly societies, it has been up to 12.57 per 1,000. Here, then, is abundant proof as to what the death rate must become in friendly societies that have existed for many years. This death rate means that $12 to $13 is required annually from each member to meet death losses. When to this the working expenses and lodge dues are added, there is a yearly cost of at least $16 to $18. New societies in the meantime have sprung up. The mortality in them is lower, because the members are more recently select

ed, and, on the average, younger. For a time these new societies are more attractive, because they are cheaper. The young and healthy members desert the old societies for the new ones, as rats leave a sinking ship. It is then, if never before, that the advocates of the no reserve plan of life insurance find out the folly of their method; and the persistent members, that they have been contributing their hard earnings for the support and comfort of others, while there remains nothing for them but bitter disappointment. This is no imaginary picture. What is here described has happened time after time; and will continue so long as men are foolish enough to conduct insurance business on the simple but crude plan of making a post mortem assessment to pay the claim of a deceased member. Thus, "the-reserve-in-your-pocket plan ends in "the-give-away-all-yourcontributions" plan.

There is another method of carrying on life insurance that is more plausible, but ends, equally with the above, in disaster and ruin. There is a fixed annual premium charged. This is divided into twelve, six or four equal portions that are called in at regular intervals. The premium, however, is too low. While the society is young, and most of its members recently selected, there is a small saving in mortality claims. A surplus is in this way accumulated, and the members think that everything is going on in a lovely manner. All claims have been paid, and there is money in the bank. What more could be desired? But the rates are too low. When the full swing of mortality is reached, no further additions to the surplus can be made. Nay, from the surplus, deductions, to pay claims, have to be made from time to time, to avoid the necessity of an assessment. In time, like the jar of meat in the fable, the top is off, then it is half gone, and finally it is all gone. The society is then one advanced in years, with a

high death rate, and no surplus. For every claim there must go forth an assessment. Need it be added that the end has then come.

If a company or a society attempts to juggle with figures, the figures, in due time, will juggle with the company or society. Take as an example 82,581 persons aged 35 years, and carry $1,000 insurance on each through to the age of 99 years, when the last is supposed to die and become a claim. Allow 4 per cent. on all moneys on hand, and it will be found that the premium each must pay, so long as he lives, is $19.87. This, of course, is on the assumption that every one of the persons continues a member until he dies. This premium will not allow any portion for expenses. These must be found in addition to the above rate. But a certain society has undertaken to give insurance, and, in addition, pay the claim when the person reaches his expectancy, which would be 68 years, on a premium of $9.36. This premium is utterly insufficient for life purposes, and still more so for endowment policies.

We hear a great clatter about lapses, and the vast sums that a society can make in this way. Let us look into this contention. In the first place, a post-mortem assessment society makes nothing by lapses. What the members pay in, by assessment calls, is paid out in death claims. On the other hand, the society loses by lapses. It has been put to the test and proven, by no less an authority than G. D. Eldridge, that the lapses occur mainly among those recently taken into the society, and still healthy. The impaired and older members remain on. In this way, the death rate among the persistent members is actually raised, as shown in the first table on the next page.

According to this table, it will be seen that the death rate among the persistent members is increased by one-sixth on account of the lapsing of healthy members. Grant that the

premium rate was sufficient during the early years of a society's history to gather a small surplus by confiscating the savings on lapsed members, it will speedily be swept away by this increased mortality among those that remain. Thus it happens that the very thing upon which such a society calculates as its great source of strength, namely, its lapses, proves, in turn, one of the main causes of its extinction. This statement has been bluffly denied, but it cannot be controverted. To deal with the lapse rate in an unscientific manner is just as dangerous as has been shown to be the case with the improper application of the mortality rates. Both lapse and mortality rates, however, have been used in a rather free and easy, but thoroughly unscientific fash

Here we have the most conclusive proof that as a society grows old, the mortality on any group of members increases. The next addition of members will follow exactly the same course. If the society ceases taking in members and has not the proper reserve on hand it must speedily collapse. If, on the other hand, it makes extensive additions to its membership each year, the death rate is held down for a time; but a time comes when the society becomes so large that the requisite new membership is more and more difficult to obtain. The members in, and growing old yearly, cannot be counterbalanced by new additions. With a membership of 100,000, it is very difficult to keep down the mortality by fresh additions. The necessity for a proper reserve is made clear by the above.

Another example, from the actual experience of assessment companies and societies reporting to the bureau above mentioned, shows that of 12,145 members, at the age of 40, who had been carefully selected, the death rate among the persistent members was as follows per 1,000 in the first policy year, 1.482; second year, 4.758; third year, 6.741; fourth year, 6.413; fifth year, 8.884; sixth year, 11.392; seventh year, 8.306; eighth year,