TILE THIRD PERIOD OF ASSURANCE.
THE beneficial action of last session was by no means confined to its work in the making of statutes ; the work done by its Select Committees was in some cases not less substantial. The result of the inquiry into Assurance Associations is a signal instance, not -only on account of the great ability with which the labour was performed, but more on account of the sterling fairness which was perhaps the most valuable element in the devotion of the members 'to their work, and still more on account of the manner in which the report clears the way for farther action. Very few instances have occurred in the history of Parliament in which so marked atribute has been paid to candour. In his speech on the motion for a Select Committee, Mr. Wilson cited many alarming stories as to the unsubstantial if not fraudulent character of Assurance Associations got up under the Joint- Stock Companies Act—the number that appeared only to sink—the evasion of the enactments requiring registration and publication of accounts—and the large amount of money in- trusted to such very suspicions depositaries. The report now pre- Bents a different story. It appears that frauds were attempted only in a very few cases, of a notorious kind, and as little reflect- ing upon the general character of Assurance Associations as the case of the Earl of Stirling needs upon the Scottish Peerage, or that of Fanutleroy upon London bankers. The dangers which were supposed to have been incurred under the evasion of the Joint-Stock Companies Act now shrink into the possibility that dangers might arise henceforward through the essentially defective _Asa/saes of that act; and all parties, indeed, are agreed on the neces- sity of amending it. It is true that of the 311 companies projected, -only 140 were completely registered, andonly 96 continue to exist and transact business; but in how many branches of commerce, espe- oially in any new direction, do the completed undertakings amount to more than a minority of the prospectuses? how many honestly intended patents are worked out ? Of the defunct companies, many have been absorbed into others, on a principle similar to that of railway amalgamation. When we consider that this re- port is due to Mr. Wilson, we cannot refuse to acknowledge the moral courage and the candour with which he has performed his -task. There is no attempt to back up ideas originally based on a less complete view of the facts than the Committee itself has fur- nished, no straining to make the Vice-President of the Board of Trade appear to have been infallibly "in the right." In itself -that example of candour is a valuable contribution to the public service.
We are glad to perceive that the Committee proposes amend- ments which tend to simplify and not to complicate the laws re- lating to Joint-Stock Companies and Assurance Associations. The first result of the Committee is to assuage many of the alarms occa- sioned by the controversy which has been going on, and to show that, however ineffective the statutes on the subject may be, there are causes at work which more effectually check unsound enter- prise in this direction than any statute control could do. And the reason is obvious. A premium on insurance is not only a periodical tax, but it is a tax voluntarily incurred, and it is always a heavy one : the motives to undergo it must be powerful, but 'they depend so entirely on confidence in the stability of the asso- ciation or company selected by the insurer, that he will not incur that tax until he shall have convinced himself that he may do so with a fair reliance. Hence, unless a company can place honest 'testimony before its customers, it will not obtain customers ; and it is probable that this very check explains the fact that so many prospectuses, with ingenious and attractive proposals, have failed to become embodied in real companies "transacting business." That it has been effectual thus far, is proved by the fact that the non-payment of a lawful policy is an event that has not yet oc- curred; and that the Committee admits the general soundness, where it began by expecting to find general unsoundness. But if the attempts to secure the same results by statutory enactments had even an apparent success, the next result would be to super- -aede the anxious caution that has hitherto proved so efficacious ; 'and thus to substitute an artificial machinery, liable to be abused -and to decay, for a living action. The most useful and general effect of the report is to supersede and settle the long controversy between the old and the new com- panies. The controversy was idle in its nature, but substantialin the inconveniences it caused, if in no other way thanhy unsettling men's minds on the general subject of insurance. The Joint-Stock Companies Act passed in 1844, and companies formed since that date, are obliged to observe certain rules in the way of registra- tion:and publicity, spared to the others. That statute marks the separation between the first and second periods of insurance. Sine 1844, but independently of the statute, several improvements have been introduced into the scientific laws of insurance. The principal perhaps are, that while a capital is subscribed by sub- stantial persons, it is not all paid up ; and that the business of as- surance is expanded beyond the posthumous payment of a sum of money. These improvements are strictly in accordance with the fundamental principle of insurance. In a given number of men, it is sure that some will die prematurely within a certain period, but that most will live and continue to support their families. The death of either one is absolute ruin and destruction to his dependents; but by extending the loss over all it becomes a burden scarcely felt. In this way, every man can " insure " a certain means to his dependents, although each and all of those men could not accu- mulate the amount sufficient to secure the same absolute result in each and all those cases ; that surety is effected by providing for the chance which affects all, of a calamity which can only affect a few. That is the principle ; but it applies to every species of dis- astrous chance—to shipwreck, for instance. It may also be ap- plied to contingencies not strictly of the disastrous kind, such as the possible existence, at a given date, of a child needing to be educated. Many children are born, for each one of whom the parents would desire to secure education ; but it is possible that death or change of circumstances may supersede the necessity when the time comes : you can now provide for it by insurance. The pro- vision of a capital subscribed, but not all locked up, is another ap- plication of the same principle to the capital itself. If a number of men guarantee the amount of money needed, its production when requisite is certified, without the waste of calling it all in. Such are the main characteristics of the "new system": the old offices, constructed for another system, declared these extensions "dangerous." The cry, retorted the new companies, was the complaint of the hen whose ducklings take to the water. The Committee, as well as experience, confirms the principles of the new system. But the controversy will be dead as soon as Parliament shall adopt that simpler law, which, securing a fair publicity for all, shell _place_alia_eld.and_u_ewaasuplaties on the Isame 'footing; and then, in of mere accusations against a rival system, long experience may usefully teach the public how to esti- mate the calculations of the offices competing for its favour, and I how to exercise that personal caution which cannot be supplied by statute.
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