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BONUS [from the Latin, Good].—A prem. given in add. to int. for a loan, or for a privilege, as the Charter of a bank; a boon-Bouvier. A prem.; an advantage.-Wharton. An extra dividend to the shareholders of a joint-stock co., out of accumulated profits.-Gilbert. A sum of money paid to the agent of a co., or to the master of a vessel in add. to a share in the profits, or to stated compensation by the month, year, etc.-Webster. The word does not even appear in the earlier eds. of Johnson; or in Walker, and some other dictionaries.
We see by the foregoing, that the word BONUS a word bearing in the eyes of most policy-holders, not to say of ins. officials also, the greatest signification of any word in the ins. vocabulary-does not appear at all in some dictionaries; and by none of the leading lexicographers is it rendered in the sense in which it is generally understood here, viz., as an abatement or return of prem.; or accession or advantage to a pol. of ins. In the U. S. the word Dividend is employed.
The periodical investigations into the affairs of L. offices-now usually spoken of as bonus investigations—did not really originate in such an object. They were advocated first by Dr. Price, and afterwards by Dale and others, as a means of testing the sufficiency of the reserve fund of a L. office to meet the generally increasing liability which must fall upon The test so instituted of course showed whether the fund was in excess of or minus the actual requirements; and when in later years the Equitable, for reasons peculiar to itself, commenced the system of allocating the surplus funds to its policy-holders, the amount appropriated for such a purpose became regarded as a special "good," i.e., Bonus; and when periods were defined for this purpose, in the moral certainty of a surplus, these were termed bonus periods. It is clear, however, that the bonus must, or should, owe its existence entirely to the fact of there being a disposable surplus. A surplus which may be safely disposed of, being ascertained, the question next arises as to how it shall be disposed of. For this reason we intend to treat of the entire subject of bonuses under SURPLUS. Thus SURPLUS: mode of ascertaining; periods of ascertaining; methods of distributing. In this manner we shall cover the whole ground; and the reader will have the advantage of having in the mean time learned the views of the best writers on several incidental questions, such as the degree of mort. to be expected; the rate of int. to be assumed; and the character of the investments: all of which, as we shall see, constitute important elements of consideration in the investigation for surplus.
It will be convenient, however, that we should here briefly refer to one or two points of practice in relation to BONUSES.
I. It has been determined beyond all question that participation in the profits of an ins. asso. does not in itself create any partnership liability. The cases which have led to the determination of this principle will be reviewed in detail under PROFITS, PAR
2. It has been decided (and the decision several times confirmed), that the payment of an add. or larger prem., with the view of participating in the surplus, does not entitle the person so paying to any larger proportion of the funds, should the office become insolvent, than a person who has not paid any such higher rate; that is the parti. and non-parti. pol. will share pari passû with the general creditors in the administration of the assets.
3. That an ins. asso is not bound to carry on bus. with the view of earning profits to distribute among its participating pol.-holders. [ARGUS LIFE.]
4. The assignment of a pol. will carry with it, unless the contrary intention appear in the instrument by which the assignment is effected, all the bonuses, whether accrued or accruing, to the principal sum; and the bonuses may be sued for with the principal sum. The same rule applies to legatees under a will; they are entitled to all bonuses accrued and accruing on a pol. bequeathed to them, even though the bonuses far exceed the principal sum insured.
There is another aspect of bonuses-that is, bonuses on shares of inst. cos. In all jointstock ins. cos., some proportion of any surplus, from time to time appropriated for division, is reserved for the shareholders. This is beyond the dividends ann. declared. A question has arisen as to whether the bonus accruing after the death of the testator upon ins. shares that have been bequeathed is to be considered in the nature of income, or an increase of the cap. This point we shall follow out under SHARES IN INS. Offices. BOOKS, INSPECTION OF.-An impression very generally prevails that the books of a jointstock co., ins. or otherwise, may be inspected by any share or policy holder or creditor at his pleasure. This is not so. The regis. of members of any co. regis. under the Cos. Acts, 1862-67, may be seen at any convenient time (see REGISTER OF Members), and all the the documents regis. at the Joint-Stock Cos. Regis. Office may be inspected for a small fee (see REGISTRATION OFFICE FOR JOINT-STOCK Cos.). The auditors are generally the only persons beyond the regular officials of the office who have any power to inspect the books, and this power is generally given by the deed or articles of asso. When a co. passes into liquidation, then [Cos. Act, 1862, sec. 156] creditors and contributories may, under an order from the court, inspect books and documents. [BOARD OF TRADE.]
BOOLE, GEORGE, LL.D., pub. in 1854, An Investigation of the Laws of Thought, on which
are founded the Mathematical Theories of Logic and Probabilities. He has also pub. other works on mathematical subjects outside our range.
BOOTH, DAVID, pub. in 1818, Tables of Simple Interest on a new Plan of Arrangement. [INTEREST.]
BORA.-A very violent wind experienced in the upper part of the Adriatic Sea-fortunately for underwriters, of very brief duration.
BORDER COUNTIES FIRE OFFICE, THE, founded in Dumfries in 1870, with an authorized cap. of £100,000, in shares of £1. Powers to increase cap.
This Co. was founded by Mr. John Innes; and amongst its promoters were many of the leading merchants, bankers, and manufacturers, in Dumfries, and the neighbourhood. The prosp. said:
The Border Counties F. Office is being formed throughout the counties of Wigtown, Kirkcudbright, Dumfries, Selkirk, Roxburgh, Berwick, Northumberland, and Cumberland, for the purpose of further facilitating and cultivating in these districts the practice of ins. against loss or damage by fire, of merchandize, buildings, farming stock, etc. It is, however, not intended to confine its operations to these counties, but to have branches and agencies in all the principal centres of business throughout Gt. Brit. and Ireland, etc. The principal offices will be in Dumfries.
That there is room for a new F. office may be assumed from the following facts:-Calculations have been made, showing that the insurable property of the U. K. at this hour remaining unprotected, amounts to over £3,000,000,000 sterling, so that only about one-third of the insurable property of Gt. Brit. and Ireland is covered by ins.. It may also be stated that during the past ten years the Scottish F. offices alone represent an increase of bus. of over 100 p.c.; this of itself would fully warrant the promoters in assuming that a new F. office will meet with great encouragement. The success of a new co. well and economically managed, cannot be doubted. The transactions of the Border Counties F. office shall be distinguished by the utmost liberality in dealing with the insured, the prompt settlement of claims, and economy, consistent with efficient management. The public, it is hoped, will appreciate the advantages of a co. holding out such inducements, and it is believed that these advantages, amongst others, applied by an efficient and highly influential Directory, will have the effect of causing the bus. of this office, within a short period, to meet the expectations of its founders. BORE.-A word used to express a sudden rise in the tide in certain estuaries—as in the Hoogley river, between Feb. and Nov., at the new and full moon; in the Severn near Bristol; in some of the American rivers; and especially in the Bay of Fundy, where, at the river Petticodiac, the tide rises 76 feet. It also occurs at Borneo, and several rivers in the East.
BORING-WORM.-The Teredo navalis is so called. This is the worm which enters wood in salt water, and there expands until it attains the size of a finger. It bores the wood into which it enters, during the whole of the passage between high and low watermark, completely riddling in those parts, and causing an infinite amount of damage to ships, etc. It is supposed that creosote is the only effective preservative against the ravages of this insect.
BORN ALIVE.-A term applied to those newly-born infants only who exhibit other acts of life than that of respiration: this is indeed, according to English law, a sign of life, but not of live birth-not of being wholly born alive.-Hoblyn.
In Gt. Britain regis. is only extended to children actually born alive; whereas in most of the European nations it is extended to the stillborn. The leading case on what constitutes being born alive is Brock v. Kellock, where the decision was confirmed on appeal. It is in conformity with the above.
BORNIER, M., pub. in Paris, in 1729, Conferences des Ordonnances de Louis XIV., etc., spoken of in our hist. of MARINE INS.
BORROWING.-Contracting a loan on security; taking money on credit. Borrowing money on life pol. should only be resorted to in extreme cases; and the loan should be repaid by means of the next bonus, or otherwise at an early date. A loan takes the vitality out of a life pol.
BORTHWICK, ARCHIBALD, late Consulting Act. of City of Glasgow L. On the founding of this Co. in 1838 Mr. Borthwick was its Man. ; but he retired from that position about 1839, to resume his former profession of an accountant-a profession which occupies a high social status in Scotland, and from which many of the most distinguished managers of Scotch ins. offices have been drawn. Mr. Borthwick, however, remained Consulting Act. of the Co., and continued to occupy that position down to the period of his death. He was also for a short period Man. or Act. of the Mutual Accumulation L.; and between 1845 and 1849 Act. of the United Deposit L. Mr. Borthwick died about 1861. BORTHWICK, CUNNINGHAM, now Lord Borthwick, practised as a consulting act., about the years 1839 and 1840-firm Sang and Borthwick. Afterwards he became a partner with his brother Archibald, last named. Lord Borthwick is at the present time a member of the Lond. Stock Exchange.
BORTHWICK, JAMES [uncle of the preceding], for many years Act. and Man. of the North British, from which positions he retired in 1857. He died in 1866, aged 85 years. BOSTON, U.S., the capital of the State of Massachusetts.-In 1702 this city was visited with smallpox, which carried off some 300 of its then limited pop. In 1721 it had another smallpox visitation, when 884 died therefrom. In 1729 the measles caused some increase of the mort. ; and in 1730 the smallpox again appeared and carried off about 400. In 1745-6-7 an epidemic fever, brought from Cape Breton, caused a largely increased mort. In 1752 it was reported that no less than 7669 persons were seized with the
smallpox, of whom 569 died. Regarding this visitation, the following interesting facts
Took it naturally: Whites, 5060-died, 470. Blacks, 485-died, 69.
1985139 The white and black inhabitants at that date numbered 15,684; of been attacked by the disease previously; 1843 moved out of the town. of 669 deaths, 527 died during the months of April, May, and June. January, and disappeared in September.
An Account of the Burials and Baptisms in Boston, 1701-52:
6. whom 5998 had Out of the total It commenced in
Most of the preceding facts and figures are drawn from the Gent.'s Mag. for 1753. Boston in its more modern phase has become congenial soil for the development of ins. in all its branches. The pop. of the city in 1860 was 178,000; it is now prob. nearer 250,000. There is perhaps no city in the world wherein a larger proportion of the citizens are ins., or for a larger amount, than Boston. In add. to some very excellent local offices, most of the leading ins. asso. of the U.S. have agencies here. The names of Russell, Lyon and Nason, Farnham Plummer, and many others, which we cannot at the moment recall, must be for ever associated with the development of ins. in this city and its surroundings. But high above all these must yet be placed that of Prof. Elizur Wright, of whose labours in the cause of ins. we shall have to speak in detail under MASSACHUSETTS. BOTTOM OF A SHIP.-Is strictly that portion of the vessel which is under water; but in a more general sense it signifies the ship itself; as "insuring a ship's bottom;" a trade in "foreign bottoms," etc.
BOTTOMREE CO., THE.-During the South Sea mania, 1720, a Co. under this title was projected, and the shares with I paid sold, according to Anderson, for £3. Whether this was the Co. already spoken of as Beele's Bottomree (or Bottomry), we cannot discover with certainty. By notice in the Daily Courant of 10th March, a general meeting of the proprietors was called for the day following, in Merchant Taylors Hall, "when matters of great moment would be brought forward, which made the attendance of the proprietors very necessary."
BOTTOMRY [formerly called Bottomree; and occasionally corrupted into Bummaree, prob. from the Dutch Bomerie].-A species of mortgage or hypothecation of a ship, by which her keel or bottom is pledged partem pro toto (in whole and in part) as the security for the repayment of a sum of money borrowed. Thus, the owner or captain of a ship may, under certain circumstances to be hereafter explained, borrow money, either to fit her out so as to proceed on her voyage, or to purchase a cargo for the voyage, or to provide for repairs, refit, and other contingencies on the voyage. The leading condition upon which the loan is obtained is, that if the ship be lost on her voyage, the lender loses his money; but if she arrive in safety at the destination fixed at the time of obtaining the advance, then the money borrowed is to be repaid, together with the interest or prem. agreed upon at the time of borrowing, at whatever rate that may be; and quite irrespective of any restriction as to the rate of int. on ordinary loan transactions.
But there is another special incident in relation to loans on Bottomry, and it is this-that where several loans have been obtained on the same ship, they are to be repaid in the inverse order to which they were obtained, viz. the last loan first, and the others in like order. Much attention has been drawn to loans of this class, and mainly for the following reasons. 1. They are very ancient-apparently coeval with the earliest development of maritime commerce. 2. They were apparently devised with the view of defeating the varying restrictions to Usury; or, if not especially so devised, were very soon specially adapted to that end. 3. They being in themselves a species of marine ins. are supposed to have led directly up to the present system of marine ins. In every aspect the subject is one which we deem worthy of the careful consideration of the student, and even of the general reader.
There are several modifications of the contract of Bottomry which must be here explained, in order to guard against confusion. Thus, where the loan is not upon the ship, but upon the goods and merchandize only, these being necessarily liable to be sold or exchanged, in the course of the voyage, it becomes almost a necessary condition of such a loan that the borrower becomes personally bound to answer the contract. This is called taking up money at Respondentia. A leading distinction, apart from this element of personal risk of the borrower, arises for whereas in a loan on Bottomry the lender runs no risk, even though the goods and merchandize be lost; so, in a loan on Respondentia, the lender must be paid his principal and int., even though the ship perish-providing the goods and merchandize are made safe. In most other respects the contracts are analogous. There is another and a distinct form of contract, in which the money borrowed is neither secured upon the ship nor its cargo, but stands at the mere hazard of the voyage itself. As when a man lends a merchant 1000 to be employed in a beneficial trade, upon the condition to be repaid with extraordinary int. in case a given voyage be safely performed. This was termed by the Romans Fanus Nauticum. It is sometimes termed Usura Maritima, or Pecuniarajectina. Each of these forms of contract will be spoken of and defined under its proper alphabetical head. They are a great deal too indiscriminately spoken of by many of the writers whom we shall have occasion to quote.
It will be seen that each of these forms of contract embodies the one principle which could alone lift them out of the range of the prohibitions against usury, viz., that the repayment of the principal advanced, as well as the recompence for its use, is made to depend upon the successful accomplishment of the voyage. The elements of maritime risk being thus incorporated into the contract, it became impossible to estimate (in the eye of the law) how much of the consideration to be paid for the loan was for int., and how much for the risk of voyage; yet if 12 p.c. came to be regarded as the proper rate for the loan of money on a ship in harbour (as we shall see hereafter was the case in Rome), all that was paid beyond that rate when the ship went out to sea might well be considered in the light of a premium for insuring the safety of the voyage.
Regarding the origin of Bottomry contracts, we can only supplement what we have already said by the dictum of Sir William Jones, and the Hon. Mountstuart Elphinstone, who expressly mention the loan on bottomry as practised by the nations of India in remote ages. Among those portions of the Institutes of Menu which are still extant is that which treats on sea laws, and which warrants, in the opinion of Mr. F. Hendriks, the comment of the writers just named. A question indeed turns upon the antiquity of these Institutes. Some writers have contended that they date back for a period of 6000 years. We have had to assert in another part of this work [USURY] that they may not be entitled to nearly such a remote antiquity. We learn from the Vyavahara Mayuka: a Treatise on the Hindoo Law, by Nilakamtha Bhatta, which discusses the rates of int. lawful to be taken, that it had been ordained by Yajnavalkya that "all borrowers who travel through vast forests may pay ten, and such as travel the ocean twenty, in the hundred." These last words seem to imply loans to merchants who, as was the custom in early periods, sailed with their merchandize to trade in ports more or less distant. The first seems to relate to transport ins.; the latter to advances on bottomry. The passage is at least sufficiently obscure to justify such a surmise. We gladly pass from the regions of doubt to those of authentic record.
The Greeks, who flourished several centuries before the Christian era, not only understood but practised Bottomry to a very considerable extent. The money was lent either upon the ship's cargo or freightage, or on the ship itself, for a specified time-commonly that of the voyage. Int. at the rate of a tenth, i.e. 10 p. c. was the minimum rate; and the other rates mentioned are 12, 16, 20, and 333. In the age of Lysias [B.C. 440] and Isaeus [B.C. 400], 18 p. c. appears to have been the common rate. The voyages were mostly short.
Bottomry was considered a matter of so much importance in Athens, that fraud or breach of contract in transactions connected with it was sometimes punishable with death. The loans were generally made upon the cargo shipped, sometimes on the vessel itself, and sometimes on the money to be received or due for passengers and freightage. The int. as well as the principal was dependent on the due performance of the voyage. The lenders took every precaution against negligence or deception on the part of the borrowers; the latter also were careful to have witnesses present when the cargo was put
on board, for the purpose of deposing, if necessary, to a bona fide shipping of the required amount of goods. The loan itself was either for the voyage out, or for the voyage out and home. In the former case the principal and int. were paid at the place of destination, either to the creditor himself if he sailed in the ship, or to an authorized agent. In the case of the voyage out and home, the payment was made on the return of the ship; and it was specially provided in the agreement between the contracting parties that she should sail to certain specified places only. A deviation from the terms of the agreement in this and other respects was, according to a clause usually inserted in the agreement, punishable by a fine of twice the amount of the money lent. Moreover, if the goods which formed the orig. security were sold, fresh articles, of the same value, were to be shipped in their place.
The rate of int. would of course vary with the risks and duration of the voyage. Xenophon speaks of the 5th and 3rd parts of the cap. lent as being commonly given in Bottomry-referring here to voyages out and home. The int. of an 8th, i.e. 123, mentioned by Demosthenes, was for money lent on a Trireme [a war vessel propelled by oars] during a passage from Sestos to Athens; but upon condition that she should first go to Hierum, to convoy vessels laden with corn. The principal and int. were to be paid at Athens on her arrival there.
But not only have we this general knowledge of the contract of Bottomry among the Greeks, but we have the very substance of the contract itself. In the speech of Demosthenes against Lacritus [prob. about 340 B.C.], we find the following contract recited, and we place alongside of it a modern Bottomry bill, for the purpose of comparison.
Androcles of Sphettoe, and Nausicrates of Carystus, have lent to Artemon [of whom Lacritus was brother and heir], and to Apollodorus of Phaselis, three thousand drachmæ of silver upon a cargo to be conveyed from Athens to Mende or to Scione, thence to the Bosphorus, and, if they please, along the left coast, as far as the Borysthenes, to return to Athens.
The borrowers shall pay interest at the rate of 225 per 1000 [224 p.c.]; but if they do not pass from the Black Sea to the Temple [of the Argonauts-the Thracian Bosphorus] until after the setting of Arcturus [i.e. before the 20th Sept. or thereabouts, when the navigation began to be dangerous], they shall pay 300 interest per 1000 [30 p.c.]. They pledge for the sum lent, three thousand jars of Mendean wine, which they shall convey from Mende, or from Scione, on board a ship of twenty oars, of which Hyblesius is captain. They neither owe nor shall borrow anything from anybody upon the wine appropriated to this loan.
They shall bring back to Athens, on board the same ship, the goods which they shall have bought with the price of this wine; and when they arrive there, they shall pay to the lenders, by virtue of the present deed, stipulated sum within twenty days, reckoning from the day on which they enter the Port of Athens, without other deduction than the losses or jettisons agreed to by the general consent of the passengers, or those which they may have experienced from (the attacks of) enemies. With such single exception, they shall pay the whole, and shall deliver to the creditors, free of any charge, e goods appropriated, until such time as they shall have paid in full the interest and the principal stipulated by the present deed.
If this sum be not paid within the defined term, the creditors may cause these goods to be sold; and if their proceeds therefrom do not amount to the sum
To all men to whom these presents shall come. I, A. B. of Bengal, mariner, partowner, and master of ship called the Exeter, of the burthen of 500 tons and upwards, now riding at anchor in Table Bay, at the Cape of Good Hope, send greeting: Whereas I, the said A. B., part-owner and master of the aforesaid ship called the Exeter, now in prosecution of a voyage from Bengal to the port of Lond., having put into Table Bay for the purpose of procuring provision and other supplies necessary for the continuation and performance of the voyage aforesaid, am at this time necessitated to take up, upon the adventure of the said ship called the Exeter, the sum of £1000 sterling moneys of Gt. Brit., for setting the said ship to sea, and furnishing her with provisions and necessaries for the said voyage, which sum C. D., of the Cape of Good Hope, master-attendant, hath at my request lent unto me and supplied me with, at the rate of 1220 sterling, for the said £1000, being at the rate of £122 for every £100 advanced as aforesaid, during the voyage of the said ship from Table Bay to Lond.: Now know ye that I, the said A. B., by these presents, do, for me, my executors, and administrators, covenant and grant to and with the said C. D., that the said ship shall, with the first convoy which shall offer for England after the date of these presents, sail and depart for the port of Lond., there to finish the voyage aforesaid. And I, the said A. B., in consideration of the sum of £1000 sterling, to me in hand paid by the said C. D., at and before the sealing and delivering of these presents, do hereby bind myself, my heirs, executors, and administrators, my goods and chattels, and particularly the said ship, the tackle and apparel of the same, and also the freight of the said ship, which is or shall become due to the aforesaid voyage from Bengal to the port of Lond., to pay unto the said C. D., his executors, administrators, or assigns, the sum of £1220 of lawful Brit.