In the order of history, life insurance followed upon marine, and fire insurance upon life. At first sight, to anyone who forms in his mind anything like a vivid picture of the crowded wooden houses, the medley of thatched roofs, which made up a mediaeval city, the order may seem strange. One might imagine that the danger of fire, and the necessity of guarding against its widespread terrors, would be ever present. But it is necessary to remember that, as before the Great Eire went the Great Plague in the sequence of facts, so, also, in the sequence of loss, mortality and damage, fire limped behind disease. The mediaeval house in a dry summer was tinder to a spark, but winter or summer it was a place of unclean rushes with little, if any, sanitation. Readers of the “Young Visiters,” will recollect that the heroine put some “red ruge” on her cheeks because, as she declared, she was pale owing to the drains of the house. The demand for “red ruge” must have been very extensive in mediæval London. There was a disease called the “sweating sickness,” which carried off inhabitants in a few hours. The Plague had visited the City many times before the winter of 1665, and was to visit it afterwards. There was a violence in the ordinary conduct of life, such as you may know after the conclusion of any great war. Medicine was in its infancy. If your child had scarlet fever, you wrapped it up in a scarlet cloth; if you had the stone, as likely as not your Doctor would make a disgusting plaster, of which the chief ingredients were headless crickets and beetles, and would rub you with it; whilst the Clergy, into whose hands much of the duty of healing the sick naturally fell, were forbidden by the Pope to shed blood under any conditions whatever. Where the Great Fire barely slew a hundred, the Plague carried off its thousands. It was natural, therefore, that men’s minds should be set on compensations for the loss of life, before they reached the idea of compensations for the damage done by fire. The ancient Saxon Guilds did, in fact, attain the rudiments of life insurance in their provisions for the payment of funerals, and for the maintenance of dependents left in distress by the death of a member of the Guild.
Life insurance, indeed, would no doubt have long since become as established a fact as the insurance of ships, but for one fatal difference. You knew the value of the ship; you knew the price which its cargo would fetch in the market; you were upon solid ground. But with regard to life you had nothing whatever to go upon. There were no figures by which you could calculate the probabilities of its duration. Life insurance was the merest gamble, and, even so late as the days of Charles the Second, you could buy a Government annuity for ninety-nine years for a cash payment equal to fifteen and a half year’s annuity.
The Provincial Letters of Pascal drew attention first of all to the doctrine of probabilities, and John de Witt, a Dutchman, applied it to the subject of life annuities. He made a report to his Government, in which he used for the first time mathematical calculations in considering the probabilities of life. His report had no immediate effect. But he had sown the seed, and Leibnitz, who devoted much time to an investigation of the theory of chances—” c’est pour perfectionner Part des arts, Part de penser,” he explained — saved the essay from oblivion.
But still there were no facts to go upon. It was the chance of the gaming table. How many times would Number 17 or Number 26 turn up on the Roulette board in a given evening, if neither of them had turned up, say, for a week before? “What are the odds that “Trente et un et après” will be seen at the “Trente et quarante” table ten times in the course of an evening? It was with the limping guidance of such questions as these that the early forms of life assurance were arranged. If the grantor of the annuity were generous, that helped to a solution, but it was rare. If the annuitant himself were ignorant, that helped too, and this was more common.
Until quite recently, the value of a life was accounted at seven years’ purchase.
The Great Plague, however, which spread so much desolation, lent a little help in this direction. Such was the terror which the Plague inspired, so overwhelming was the fear of its return, that what we should now call the morale of the race was shaken. The people of those days were as vague in their computations of numbers as in their spelling, and rumour would exaggerate into millions the deaths of thousands. In order, therefore, to reassure the public mind after the Great Plague, Bills of Mortality were issued by the various Parishes by Order of the Government. Up to the end of the 17th Century the appearance of these Bills was sporadic. But, with the beginning of the 18th Century, so useful had they already proved, they became a regular element in Parish life. They were made up on Wednesdays, published on Thursdays, and anyone who cared to pay 4s a year could subscribe for a copy.
The progress towards a system of Assurance, as will be seen, is so far slow. We have got from the gaming tables by way of the Great Plague to Bills of Mortality. But still there is hardly a glimmer of science. The Bills of Mortality themselves suffered from a grievous defect from the point of view of insurance. They included a statement of the cause of death, and even of the particular disease from which the patients died, if — and it is a considerable “if” — the disease were amongst those known to the medical faculty. But they did not give ages. And without ages the probabilities of the duration of life were still mere guesswork. Life insurance, as we understand it, is based upon a scientific computation in which the ages of the insured are the first consideration. During that Century, however, three men appeared, to whose efforts the real science of insurance owes its chief debt.
The first of these men — one John Graunt, the son of a tradesman, who had migrated from Lancaster and settled in Birchin Lane — enjoyed no more of the opportunities of education than the sons of other tradesmen. He left an unknown school early for the counter of his father, shared in the public work of his Ward, and became a Major in the train bands; but some spark in the man set his thoughts upon the laws of life so far as the Bills of Mortality helped to their elucidation. He seems to have been impressed, and even annoyed, by the extraordinary carelessness with which men reckoned the population of London. It was spoken of in millions. One grave writer, indeed, went so far as calmly to assert that there were two million less people living in London in one particular year than in the year which had preceded it; and he made this astounding statement as though it were a matter which anyone might expect.
John Graunt published in 1662 his “National and Political Reflections on the Bills of Mortality.” The work made a great stir, and did not, by the way, increase its author’s popularity, for he accounted the population of London at 384,000, and this calculation, which was very near the truth, did not find favour in the eyes of those swelling signors who only condescended to think in millions. The book, however, within the year, passed into a second edition. It set men thinking, and it impressed one, whom, most of all, so dry a subject would have been likely to repel — no less a person than His Majesty Charles himself. Charles the Second recommended John Graunt to the Royal Society, and charged the Fellows in round terms “That if they found any more such tradesmen they should admit them all.” The book found its way across the Channel, and in consequence Louis XIV. ordered a register of births and deaths to be kept in France, of a character much more strict than was observed in any other country of Europe.
The Reflections contained many surprising odds and ends of calculation. John Graunt computed that seven men out of every hundred in England live to the age of seventy; that only three women out of two hundred died in childbed and only one in labour; and that out of one hundred people, only one will be left alive at the age of 76 and none at the age of 80. He deduced from his calculations that the world was not more than 100,000 years old, and he drew, probably for the first time, that distinction in land values which has made, and continues to make, so loud a stir in our generation. For, in putting questions as to the amount of hay an acre that a meadow might bear, or the number of cattle which it might feed, he adds “of which particulars I quote the intrinsic value, for there is another value, merely accidental or extrinsic, consisting of the causes w
hy a parcel of land lying for a good market may be worth double another parcel, though but of the same intrinsic goodness; which answers the question why lands in the North of England are worth but sixteen years’ purchase and those of the West above twenty-eight.” He aimed at classifying the vocations of men, with a word, by the way, against Doctors, who persuade “credulous and delicate people that their bodies are out of tune.” He thus raised a number of interesting problems for the speculation of thinking men, and there is little doubt that to the influence of his book was due a vital amendment in the Bills of Mortality. In 1728, the ages of the dead were included as well as the ailments from which they had died.
The second of the three men was Sir William Petty, a man of a very different stamp. He was a speculator; he had a great love of money and a great love of land. He probably had a sense of humour, for, when challenged to fight a duel and having the privilege of choosing the place and the weapons, he selected a dark cellar and a carpenter’s axe. He certainly had the ambition to found a great family and leave to it a great inheritance, and in this he succeeded. He was the son of a Romsey tailor, and he left the house of Lansdowne.
Petty wrote “An Essay on Arithmetic concerning the Growth of the City of London, with the Measures, Periods, Causes and Consequences thereof.” Petty estimated that in 1682 the population of London was 670,000, it having doubled itself within the preceding forty years. He was at a loss, however, to account for the increase. He could, he said, pick up some remarkable accident and declare it to be the cause, “as vulgar people make the cause of every man’s sickness to be, what he did last eat.” But Petty was not content with such a device, and preferred to attribute the swelling numbers to some natural and spontaneous advantage that men find by living in great societies.
There is already, as you will see, a glimmer of science, but still not much more than a glimmer. Sir William Petty was led on to some curious prophecies. For instance, the world would be fully peopled within the next 2,000 years, and the growth of London must stop of its own accord before the year 1800 was reached.
The influence of these two men upon thought continued to grow, and in the year 1693, the most important year in the history of the science of insurance, Doctor Halley, the Astronomer Royal, published in a pamphlet a table of probabilities of the duration of human life at every age. He at last had something to go upon. He had discovered that the town of Breslau, in Silesia, had regularly issued Bills of Mortality in which the ages of the dead were recorded. He took the rate of mortality in that town during five successive years, and for the first time based the calculation of the duration of life upon a scientific foundation.
CHAPTER VI.
SOME ODDS AND ENDS.
IT IS CURIOUS that, although the idea of insurance is utterly opposed to that of gambling — the one aiming at rapid gains, the other merely at protection from loss — still insurance took its origin from the doctrine of chance as observed at the gaming tables, and led to the discovery of quite a new form of gambling, which achieved an extraordinary vogue in the first half of the 18th Century. It was a period of fine clothes and callous natures; of high costs and lavish expenditure; of turbulent politics and grave risks. Such a period was the very soil in which gambling and speculation were sure to flourish. But, even so, the rapidity and the ingenuity with which the possibilities of gambling, by means of this new-fangled fashion of insurance, were recognised are quite remarkable. Indeed, during the greater part of this period, gambling in policies altogether superseded the legitimate business of insurance. The life of Sir Robert Walpole, whose person seemed at one time in peril from popular tumult, at another from party hatred, was always there to be insured, if less attractive propositions were not that morning to be discovered.
It is difficult to imagine the state of indignation which would have been aroused if, during the late war when the King went to his troops in France, great premiums had been asked and paid against his return. Yet that happened to his predecessor in the 18th Century. When George the Second fought at Dettingen, 25 per cent, was openly paid against his return. The movements of Charles Edward, the Young Pretender, in 1745, provided one with a sensation of terror in the morning and an opportunity of putting some cash into one’s pocket in the afternoon. There were no daily newspapers, and in much later days, when Wellington was fighting in the Peninsula, the news of Busaco and Badajoz took a fortnight to reach London. Charles Edward’s march to Derby at the head of his dreaded Highlanders, and his retreat, put a good deal of money into the hands of the assurers of Lloyd’s and the members of Garraway’s. Nor, when this rabble had melted away, and he himself was a fugitive in the Western Islands, was their ingenuity at a loss. The Young Pretender was insured against capture; he was insured against decapitation; and if the poor youth could only have gathered up the money which was wagered one way or another upon his luckless head, he would have had enough for another fling at the Throne.
But even though Charles Edward was not captured, many of his followers were. Everyone remembers how Lady Nithsdale rescued her husband from the Tower by dressing him in her clothes and remaining behind in his. You would hardly believe that that gallant exploit raised the wildest indignation in the City of London because so many underwriters stood to lose if Lord Nithsdale kept his head upon his shoulders. Would Admiral Byng be condemned and shot? Would he be condemned and not shot? Would he be acquitted? What was the value of the life of the Duke of Newcastle, Prime Minister when Minorca was lost? Any of these questions could form the subject of a wager by means of a policy of assurance. The strangest dispute of all, however, finally led to the intervention of the Law, and a decision by Lord Chief Justice Mansfield, that a policy of assurance entered into by a person holding no insurable interest was against public interest.
This dispute, which provoked a commotion almost inconceivable to us, was concerned with the sex of the Chevalier d’Eon. We are apt to take historical events for granted, neither marvelling at their strangeness nor speculating upon the manner with which contemporaries received them. Can you imagine a Frenchman of distinction, coming to England upon a confidential mission, quarrelling with the Ambassador of his country, accusing publicly this or that statesman of treachery, and finally arousing the most widespread doubts as to whether he was a man or a woman? Yet this very thing did happen to Charles Geneviève Louise Auguste d’Eon de Beaumont, and we hardly need to be told that the assurance brokers of the City of London found this spicy problem very much to their taste. Policies were opened by which it was undertaken that, on payment of fifteen guineas down, one hundred should be returned whenever the Chevalier was proved to be a woman. The Chevalier, after some passing pretence of indignation, graciously allowed, that at a certain Coffee House, at the hour of noon, he would satisfy all whom it might concern. As may be easily imagined, the assurances were immediately and greatly increased, and there should be no reasonable doubt that the Chevalier got in return for his condescension what nowadays we should call a “rake off.”
At the appointed hour, the Chevalier appeared in the uniform and the decorations of an officer, and, claiming to belong to the sex whose dress he wore, challenged anyone present to disprove it with sword or cudgel.
This was not the sort of solution of the problem which commended itself to the citizens of that day, and all the more, since the Chevalier was known to be remarkably expert with the small sword. The crowd of underwriters and brokers dissolved, leaving the great question of the day unanswered. An action was brought in the Court of Lord Chief Justice Mansfield, who gave the decision to which we have already referred. An Act had already been passed that insurance made on the life of any person on the account of another who had no interest in that life should be void. Lord Chief Justice Mansfield laid it down that the same principle should be held even when the policy was not a policy on life.
It is obvious that the system of insurance, once it became general, would give opportunities to the ingenious criminal. The cases, however, of such frau
ds or such attempted frauds are, comparatively to the vast volume of insurance business done, astonishingly few. Still fewer present those conflicts of emotion — those struggles between ill-assorted natures thrown together in the jumble of life — which alone give interest to the study of crime. Most of the insurance frauds represent no more than sordid efforts by mean men or women. One or two cases, however, do stand out by something especial in the way of audacity or imagination on the part of the chief criminal.
That of Thomas Griffith Wainwright is probably the most remarkable. Wainwight was a person of amazing vanity and considerable good looks, who affected the military style of dress which was the last word of male fashion in the days when he lived. You may read a description of the man in Bulwer Lytton’s novel “Lucretia,” where Wainwright postures as Gabriel Verney. Postures is the word, for though Wainwright was not without talents and high abilities, to posture was the enjoyment and ambition of his life. He contributed articles to the “London Magazine” at a time when Lamb, Barry Cornwall, Haslitt and Alan Cunningham were the chief contributors. Under the name of “Janus Weathercock” he wrote on Art, the Ballet and the Opera. He wrote in a fashion which has become much more common to-day than it was then: — the fashion, I mean, of creating first of all a personality, through the eyes of which the subjects to be reviewed are seen. The “Eye Witness” whom Wainwright described to the readers of the “London Magazine” was, needless to say, himself, and he drew the picture of himself with so loving a pen, such luxuriant details of his elegant dress, his fine appearance and his exquisite manners, as would make the very effigy of a coxcomb. That one might not misunderstand his writings, he enforced them with his pencil — he was an artist of no small ability — and drew types of female beauty in which “the voluptuous trembled on the borders of the indelicate” — we — quote his own luscious phrase. As you can imagine, he had no high opinion of the artistic capabilities of other men, and like all persons endowed with so triumphant a vanity, he impressed those more modest craftsmen who were conscious of their imperfections. He fairly took in Charles Lamb, for instance, who spoke of him as kind and light-hearted.
Complete Works of a E W Mason Page 836