result on a small revenue of the expenses incidental to a going business. It is a force sufficiently strong to make the outlay of this class of office the highest of any under examination. And, as already mentioned, had the table been continued below £100,000 of fresh assurances, its weight would have become more and more crushing to the profit-producing power. As the new business augments, this influence loses strength, and reaches its minimum in the largest companies on our list. Simultaneously with its decay, however, another force grows in strength. The expense curve, which had been gradually falling, begins again to ascend, and goes on increasing till it reaches another maximum, at the point in the table where the influence first spoken of is at its minimum.

The only explanation of the effect of this new power on the expense curve seems to be, that as the new business augments in a life office, the cost of obtaining it increases still more, and very soon neutralizes the advantage of the additional premium revenue. The life assurance field seems capable, by ordinary culture, of giving only a certain crop of new business; if a larger return is wished from the soil than the amount it thus naturally yields, it can only be had at a cost to the policyholder in manure, at least as great as the return is worth to him. The life offices are selling a commodity that, however salutary, is not palatable. A certain number of persons will, without excessive outlay on the part of the societies, be self-denying enough to join the offices. If a life company, not content with this number, go "out into the highways and hedges", to compel new entrants to come in, it may have done these entrants, and the State also, a service; but to the policyholders already assured, the consciousness of having thus done good, must be the sole reward; for they will reap no other.

I am not now giving any opinion as to whether the greater outlay of the offices getting the greatest number of new risks is, or is not, a desirable thing. I am simply asserting that the increased business brings no additional profit to the policyholders. In thus arguing, it must be remembered that I am not talking of individual companies. There are societies getting a large new business at a small cost; and, on the other hand, there are offices lavish in their outlay, with but little to show for it. Discussing life companies in the mass, I say that I can find no evidence that a great number of new entrants has a beneficial effect on the springs of profit; and I appeal to the preceding table in proof of the

statement. It is quite true that, in that table, there are individual societies with an expenditure so great, as to raise materially the average over the whole section to which they belong. But no single class has a monopoly of such instances; and if we reject from the comparison offices of this stamp, our result will still be practically the same as at present. It is true also that even under a form of schedule settled by act of parliament, there are in the various companies, discrepancies which the returns offer no means of correcting, in the manner of regarding several items in the accounts. This, however, is too small a matter to affect our conclusions.

If, instead of taking the figures of the last Blue-book, we take the average of the three years during which Parliament has compelled the registration of accounts, the following is, for the same companies as before, the result,

It will be seen that this result is virtually in accordance with that of the previously given table.

It may be noted that in the last three of the sections, the average outlay of the triennial period is somewhat in excess of that of the latest of the three years. This, however, happens solely from the very lavish expenditure of two or three offices, (far beyond all their neighbors in this respect,) having been recently diminished. Whether this be owing to the wholesome publicity secured by the Act, or to other causes, it is unnecessary for our purpose to enquire. It is sufficient to know that no generalization can be drawn from this diminution. The expenditure percentage of almost all the other companies is either stationary or increasing, and it is so even if there has been considerable augmentation to the premium revenues. I do not give the figures for the three years, because the period is too short to eliminate temporary perturbations in the receipts and expenditure. I may say generally, however, that scarcely a single office shows any diminution in the ratio of outlay to premium revenue; and of the very few that do, those acquainted with the societies in question, will have no difficulty in tracing the result to causes peculiar to themselves.

In fact, when the expenditure proportion goes up in a life company, it very rarely comes down again.

I have now shown, from the individual policyholder's view point, that though offices with a large number of new assurances, may have, speaking generally, greater freedom from fluctuations than smaller societies, they have no more profit-producing power than these latter. I will complete my analysis by calling attention to the comparative values of the business obtained by each of the two classes of companies. It is certain that the policies obtained by severe pressure on the provident public, are not so valuable to an office as those secured by less extreme means. And, speaking generally, and not stating it as universally true, it may be affirmed that the larger the number of new assurances, the greater the proportion in it of this less valuable business will be. The ratio of discontinuances to total numbers augments as the striving after fresh proposals becomes more intense. Even if, through this cause, the increase of the office's premium revenue be not like that of the water in the Danaides' jars, these lapses are seldom beneficial to a life company. They are almost all risks of very short duration. It is doubtful whether policies discontinued so soon after entry, are remunerative to any going office, however sparing in outlay it may be. It is more than doubtful, when this plentiful crop of risks has been obtained at great cost. And it must be remembered that direct outlay is not the only element in the matter. The selection of discontinuers has an influence on the mortality of the company.

Summing up then the comparative advantages to an assurer, of societies transacting a larger or a smaller new business, the first offer greater freedom from fluctuation, and somewhat less profitproducing power, than the latter. It can hardly be too often repeated, however, that these conclusions are the result of an analysis of the experience of the class, and would mislead if applied indiscriminately to every individual office of that class. Though it is not a rule, then, without exception, it is at least something gained, to have shown, speaking generally, as I believe I have done, that the excessive striving after new business, now so prevalent among life companies, is a very doubtful gain to the policyholders in them. I am far from desirous that the assurance world should be a sort of "Sleepy Hollow", but the danger in our day lies rather in the opposite extreme. Offices with a large amount of new assurances are praised on all hands for their achievements, without any count being taken of their cost. In not a few instances, the

policyholders were better off when the company was less ambitious. I am not urging a plea for laziness or want of energy. I am deprecating no one of the forms in which life proposals are nowadays angled for. By all means let assurance societies get as large as possible, and let every nerve be strained by their officials to make them so; but in thus acting, let not the cost of the operation be ignored, or even put into the background.

The question discussed above by Mr. Macfadyen is one of great practical importance, and the result he has arrived at is a remarkable one, well deserving the attention of the managers of life insurance companies. It will be noticed, however, that Mr. Macfadyen makes no allowance for the heavier ratio of expense that necessarily attaches to the new business as compared with the old in every company, whether large or small, whether long established or of recent origin. Without expressing any opinion on the present occasion as to whether Mr. Macfadyen's remarkable figures fully justify the conclusions he deduces from them, we have thought it would be interesting to many of our readers to see how the figures would come out, if allowance were made in the manner proposed by Mr. Deuchar (in the paper preceding Mr. Macfadyen's), for the greater expense attaching to the new business. Mr. Macfadyen having kindly furnished us with the names of the 55 offices whose accounts have been examined by him, we have recomputed the average percentages of expense, taking the figures-not from the bluebook, as he has done, but from White's Insurance Register; and the results are shown in column (2) of the following table. The figures, it will be seen, substantially agree with Mr. Macfadyen's; not only as regards their absolute magnitude, but what is of more importance, as regards their comparative magnitude. We have next computed the average percentages of the renewal premiums that are expended, on the suppositions, first, that one-half the new premiums, and secondly, the whole of the new premiums in each company, may be considered as a set-off against the expenses; and the results are shown in columns (3) and (4) of the table.

The results, it will be seen, support Mr. Macfadyen's statements

as to the greater expense attending the management of companies doing a very large new business; for they show that even when the fullest possible allowance is made on account of the expense attaching to a large new business, the average rate of expense attaching to the management of the old business is greater in the companies doing a very large new business than in those doing a more moderate amount.-ED. J. I. A.

On the Mortality of the Clergy. By HERR HEINRICH STÜSSI, of Zürich. Translated and Abridged by D. A. BUMSTED,

Fellow of the Institute of Actuaries.

INTRODUCTION.

I HAVE somewhere read that the experience of life assurance companies furnishes the only certain means of ascertaining the law of mortality, since by this means only is it possible to keep in view through a lengthened period and trace up to death, each of a selected number of persons. As far as the possibility is concerned, we may admit that the law of mortality of the members may be deduced in this manner by proper methods. It is important, however, to bear in mind that, in the case of assurances, we have to deal with selected lives; and the influence of this selection, though it may be disregarded in the later years of assurance, is of considerable importance in the earlier years, so that, unless special precautions be taken, the mortality of the general population cannot be correctly obtained. The mortality may be more nearly determined if an account be kept of the rejected proposals, as is done in England,* and the deaths noted which happen among those cases. This, I certainly think, should be done universally, as it must be of practical use to the companies to know how far the rules by which they are guided in accepting or rejecting proposals are justified. No such account is kept, as far as I know, either in Germany or Austria. We may otherwise eliminate the influence of selection, by omitting from the calculation the earlier years of assurance, during which this influence is felt.

With regard to the mortality of children, correct results may be obtained from endowments; as there is scarcely any selection of lives, and the assurances are almost always effected on condition that the premiums shall be returned in the event of the early death of the child.

*The author is of course mistaken in supposing that any investigation of this kind is commonly made in England, altho' it was certainly done for a time by one company.-ED. J. I. A.