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therewith. There was much diversity of opinion concerning the measure. Its advocates held it forth as a sure preventative of many former abuses; others regarded it as altogether a futile attempt to regulate private dealings beyond the scope of enlightened legislation.
In the end there was passed, this same year, the 17 Geo. III., c. 26.-An Act for registering the Grants of L. Annu: and for the better protection of Infants against such Grants. The preamble sets forth, "Whereas the pernicious practice of raising money by the sale of Life Annu. hath of late years greatly increased, and is much promoted by the secrecy with which such transactions are conducted, be it therefore enacted," etc. And it was enacted: that a memorial of all deeds, bonds, etc., for granting Life Annu. should, within twenty-one days of the execution thereof, be enrolled in the Court of Chancery; which memorial should contain the date, names of the parties, witnesses, etc.; otherwise every such deed, bond, etc., should be void. All future deeds for granting annu. were to contain the consideration, "which shall be in money only," and the names of the parties in words at length. All contracts for the purchase of annu. with any person under 21 years of age were to be void. Any person who should procure, or solicit, any minor to grant an annu., etc., should be punished by fine or imprisonment, etc. Solicitors, scriveners, etc, who should take more than 10s. per £100 for procuring money for annu. should be punished by fine and imprisonment. There were a few exceptions, such as annuity or rent-charge under will or marriage settlement, to which the Act did not apply; nor did it apply to annu. granted by any corporate body, or any authority or trust created by Act of Parliament.
Even this Act-very different from the orig. measure was not passed without some considerable opposition. We find in the Morning Chronicle and Lond. Advertiser, 6 May, 1777, a very strong article against it, from which we will only extract the following:
The result will be that a multitude of gentlemen in every part of the three kingdoms (for almost all their loans have been made in London) will find, to their inexpressible astonishment and indignation, their most private concerns and important secrets become the talk of the whole neighbourhood. The consequences to the peace of families must be dreadful beyond description; and it will render the members of parl., and especially the knights of shires, who perhaps have never attended to this matter, and therefore neglected to oppose this tyrannical, unconstitutional, ex post-facto clause, so extremely unpopular and odious in their several counties as to ruin their interests with the most useful and respectable of their constituents, or subject them to an immense deal of extra trouble and expense to get re-elected; for when such a clause has once passed, all the mischief will be done, and no reparation can be made to the sufferers, as in other cases, by repeal.
In the Morning Post and Daily Advertiser, 5 May, 1777, we find the following:
Annuity Act.-Any man of known honour and consideration desirous of raising a temporary sum of money by the grant of an annuity for his life, redeemable at his pleasure, may be supplied to a capital amount by a person of very respectable situation and character. If immediate application is made the registering of the transaction in the Court of Chancery, as directed by the intended Annuity Act, will be avoided. At the same time, such gentlemen as think proper to apply may be assured that the business (though previous to the Act being in force) will be negociated without the least exaction on the grantor. It is requested that applications may be made by letter to A. A., to be left at Mr. Jenkinson's, Charles Street, Soho Square, which will be instantly attended to.
In the Morning Chronicle and Lond. Advertiser of the 8th of the same month the advertisement is repeated.
It has been said of this Act, that during its existence it gave rise to more litigation than perhaps any other statute since Magna Charta; and according to Sugden, the Courts, in their dislike to it, frequently carried their decisions not only beyond the letter, but occasionally beyond the spirit of the law. It has been further remarked of it, that, although the very doubts and difficulties it created might have a tendency in some degree to limit loans by way of annu., they yet, as a necessary consequence, rendered such transactions more onerous on those who ventured to engage in them. The lender was sensible of the risk and danger he ran of having his deeds set aside on some technical ground, foreign to the merits of the contract, such as an imperfect memorial-a document which it appears few lawyers could prepare with the certainty of its standing the scrutiny of the Courts, and he, the lender, therefore seldom failed to exact such an increased percentage as an insurance against the hazard he ran of losing the securities for his money. Thus the borrower, or grantor, paid not only the high rate of int. for the use of the sum lent, which the state of the times required, but a heavy surcharge upon the market rate, as the other compensation for the danger incurred by lending it.-Kelly. The Act, which did not extend to Scotland or Ireland, was repealed in 1813, by 53 Geo. III., c. 141, and re-enacted in another and more specific form.
Macpherson, in his Hist. of Commerce, says, "This remedial Act, framed with the wisest and most benevolent intentions, has been perverted by mistakes and violent misconstructions so as to be made to hold out encouragement and protection to many infamous frauds."
Shortly after the resolutions of the parl. committee had been made public, there appeared in the pages of the Gentleman's Mag., a paper-The Value of Annu. to Prevent Usury Accurately Stated, signed "W. D. author of Calculations of the Value of Annu." The writer was William Dale, already spoken of. He says the plan of the committee was much approved of "on account of the plain method of distinguishing between money
paid for rate of int., and that paid for risk of life." He then furnishes some tables to show that the committee allowance for risk of life was not only compensation fully sufficient, but at some ages much more than sufficient, "even by Lond. Mort., which is greater than by most, or perhaps by any other bills." He adds, this may expose the exorbitance of usury in general; and indeed his principal motive was to inform borrowers of the great interest which they unthinkingly pay by such mode, “hoping they may have discretion to profit by the explanation.” He contended that the utmost compensation for the risk of life ought not to exceed what the Equitable So. required, "because no calculation from any table of mortality allows so much." He thus concludes his letter:
Nevertheless, to obviate any cavilling, let the committee's full allowance be admitted. Then a person advancing 100 on the life of age 21, ought to receive £4 annually for risk, and which being paid, he could not lawfully receive more than 5 p.c. for int., which would be 9 p.c. in the whole for the foan and which would be at the rate of 11 years 40 days' purchase; or, which is the same, £11 25. 2jd. should be paid for each £1 annuity.
But if age 21 should grant an annuity for six years' purchase, it would be paying at the rate of £16 135. 4d. int. p.c. p.a.; out of which, deducting the full compensation of 4 p.c. for risk of life, the remainder would be £12 135. 4d, for int. simply.
As to pretence of lives on which annuities are obtained being more than commonly hazardous, on account of a freer manner of living, or on whatever other account, will those engaged in such traffic deny that they are particularly cautious of adventuring to advance money on any life which they cannot get insured, unless it appear to them so good that they chuse to abide the chance of it themselves? The Equitable So. insures this age of 21 for £3 95. 4d. p.c. p.a., in which case, therefore, the purchaser might enjoy £13 45. p.c. clear annuity for int. only, without risk, having secured the whole capital to be repaid on the demise of the grantor.
Usurers understand these advantages so perfectly that there can be no need of information to them; but if these explanations could induce the thoughtless prodigal to reflect on the unconscionable price (attended with other expenses) paid for present enjoyment, it might restrain immoderate pursuits, and render future moments more comfortable.
The learned Blackstone, who wrote his famous Commentaries shortly before this period, offered the following observations on the subject now before us :
The practice of purchasing annuities for lives at a certain price or prem., instead of advancing the same sum on an ordinary loan, arises usually from the inability of the borrower to give the lender a permanent security for the return of the money borrowed at any one period of time. He therefore stipulates (in effect) to repay annually, during his life, some part of the money borrowed, together with int. for so much of the principal as annually remains unpaid; and an additional compensation for the extraordinary hazard run of losing that principal entirely by the contingency of the borrower's death; all which considerations being calculated and blended together will constitute the just proportion, or quantum, of the annu. which ought to be granted. But as the right to recover the principal is put in jeopardy, a transaction of this kind (however high might be the amount of the annu. exacted by the lender, in proportion to the sum advanced) was never considered, at least in our own times, as an usurious bargain. Nor has it ever been deemed of that character, though the life of the borrower be ins. (as is an usual practice) at some ins, office for the benefit of the lender, and the amount of the annuity be so adjusted as to cover the expense of such ins.; nor though the borrower himself agree to insure his own life, at his own expense, for the benefit of the lender; though by such arrangements the latter is indirectly protected (supposing the office to be solvent and the insurance kept on foot) from all danger of losing the sum advanced.
As a means of defeating the Usury Laws, the device was a success.
In this very year, 1777, an important annuity case arose, of which Francis (Annals, etc.) furnishes the following graphic account :
During the minority of Sir John St. Aubyn, and at the early age of 17, this gentleman found himself, like many more, in want of money. The scriveners of the City were ready, the extravagancies of the youth supplied, an unlimited amount of cash was placed in his possession, and in return he granted to the underwriters annu. guaranteed on the estates to which he would succeed at 21, assu. his life with them in the mean time to guard against contingencies. Not content with this, the underwriters made him procure the additional guarantee of a schoolfellow, for which the young scapegrace pledged his honour to his friend. When he came of age, he fortunately arrived also at years of discretion, and instituted a suit in Chancery for the destruction of the bonds which he had granted. Great was the wrath of the money-changers, but their anger was vain, and they were obliged to content themselves with the righteous decision, that on repayment of the principal, with 4 p.c. int., the annuity bonds should be given up. Nor was this a solitary instance in which the assu. and annu.-mongers were over
It will be incumbent on us, when we reach the subject of USURY, to show how and when the several forms of evasion from time to time practised arose. This we believe we shall be able to accomplish. Confining ourselves here to Annuities on Lives only, we need but state that when it once came to be admitted that there was no usury when the principal advanced was put at risk, the device of the borrower selling an annuity for the duration of his life to the lender appeared complete. And even when the jurists, not readily outwitted, made good the position that both principal and interest must be in danger of being lost, to lift the transaction entirely out of the category of usury, it will be seen that the dealings in Life Annuities even met this emergency. But the money-lenders had barely built upon this bulwark of protection to their operations, than they commenced to sap it to its very foundations. They did not want the practice to realize the theory. They did not want either their principal or their interest to be in jeopardy; and they know the remedy. It was by means of Life Ins. If they insured the life of a borrower, then his death, which indeed caused the stoppage of the annuity, brought them back their principal. It was a long time before the Courts became reconciled to this paradoxical evasion; but they ultimately did so. Another danger also threatened.
The borrowers grew tired of placing themselves entirely at the mercy of the lenders, and they devised the system of redeemable annuities. Again the Courts rebelled, but ultimately succumbed. We shall treat of these points more at large as we proceed.
In 1777 also Mr. Wm. Dale pub., A Supplement to Calculations of the Values of Annu. pub. for the Use of Sos. instituted for Benefit of Age. Containing various illustrations of the Doctrine of Annuities, and Compleat Tables of the value of £1 immediate Annu. (being the only ones extant by half-yearly Int. and payments). Together with investigations of the state of the LAUDABLE So. of Annuitants, showing what annu. each member hath purchased, and the Mort. therein from its institution, compared with Dr. Halley's table; also several Publications, Letters, and Anecdotes relative to the So., and explanatory of proceedings to the present year, etc. The writer in his opening para. shows pretty well what had been the consequence of the raid made by Dr. Price and himself upon the annu. asso. of which we have already spoken:
Of all the deluding inst. for benefit of age, the writer knows of but three at present remaining. Of these only one (he believes) has attempted reformation, and that attempt has been frustrated merely because the intelligent and humane were in the minority. To prove this allegation true, the author of Calculations, etc., thinks it incumbent on himself to submit to inspection of an impartial and candid public, such calculations as he presumes may fully demonstrate it to the entire satisfaction of all who read with willingness to understand. For which purpose compleat Tables of £1 annu. by half-yearly int, and payments; Tables of what annu, each member in the Laudable So. of Annu. has purchased; and the actual state of mort. in that So. from its institution, are here subjoined. And these the writer deems himself called upon by both the contending parties to produce.
He then recounts many points of the controversy to which we have already specifically referred.
Contrasting the smaller Mort. which had been experienced in the Laudable So. of Annuitants against that which had been experienced by the Laudable So. for the Benefit of Widows, he offers a practical suggestion, which is now generally supposed to be the result of modern sagacity :
It may be that tables of mort. which include a mixture of healthy and ailing, would not agree with either of these sos. separately; for it might be expected beforehand that fewer would die in the first, and more in the last, than what the tables suppose. Such consideration would direct the application of tables which suppose the fewest deaths to the So. of Annuitants; and the contrary to the other So., as the most prob, means of approaching nearly to the real state of mort. in each So. Accordingly, comparison finds that real longevity in the Laudable So. of Annuitants exceeds that supposed even by BRESLAW BILLS; and perhaps comparison would find that real mort. in the other, and such like sos., would exceed that supposed by even Lond. Bills were it not for the particular consideration which counter checks, by taking all possible precaution to admit no life suspected of unhealthiness, either in state of body or profession.
He then addresses the following remarks to the orig. founders and then managers of the Laudable So.
Do they not know that the inst. according to their plan is the direct reverse of "laudable"? Will they themselves presume to term it laudable to have seduced unwary believers to hope for £44 annu. by constant promise and formal agreement? Will they term it laudable to mock the deceived and disappointed, by telling them that "the Sec. always informed every member at entrance what the cap. was, and the number of members-it was for them to calculate? Will they term it laudable or humane to tell deluded age that the promised annu. cannot be paid; and even so much as has been purchased and might be received, shall not be paid them; for that they the first members having bought the least, and being the majority, have desire and intention, nay, have already resolved to be sharers in the stock equally with those who have purchased the very most, and depended on agreement, and on their promise, to receive it with addition; that is not less than £44 during life?
In this vol. was contained (p. 49) a table showing the value of life annu. by halfyearly payments, int. 3 p.c. according to Simpson's and Halley's Tables; the first time, we believe, that half-yearly values had been calculated.
In 1778 the Government raised a further sum of money by the sale of life annu. this year also the third Irish Tontine was set on foot; and the nominees, in each case, were included in Mr. Finlaison's Observations in 1829.
In 1778 also was pub., Articles of the Universal Inst. for Annu. and Assu. on Lives. In three parts. [HIST. OF LIFE INS.] And in the same year, by W. Backhouse, A Dissertation on the Value of Life Annu. deduced from general principles clearly demonstrated, and particularly applied to the Schemes of the Laudable and Amicable Sos. of Annu. for the benefit of age. Also, same year, at Vevey, by M. Fatio, an extensive collection of tables, embracing some on annuities.
In 1779, by 19 Geo. III. c. 18, the sum of £7,000,000 was authorized to be raised on Annu.; and £490,000 by a Lottery. Every 100 sunk for an annu. was to produce a 3 p.c. annu. redeemable by Parl.; and also an annu. of £3 155. p.c. for 29 years, and then to cease. But every subs. might exchange the last-named annu. for a life annu. on intimating a desire to do so before a certain day named in the Act, and naming a nominee there being no restriction as to age of subs. or nominee. Persons who subs. a £1000 to the annu. fund were entitled to 7 tickets in the Lottery upon paying a further sum of £10 each for the same.
The Government of that period was driven to great extremities for raising money; and nearly every session one or two Annuity Acts were passed, generally accompanied by a
Lottery project. But most of the annu. granted were for terms of years or in perpetuity, and therefore do not require detailed notice here.
In 1779 Mr. Wm. Morgan, Actuary of the Equitable, pub. his Doctrine of Annu. and Assu. on Lives and Survivorships Stated and Explained. The particular degree of merit to be ascribed to this work has been the subject of some controversy. It appears to have been pub. very much at the instance of Dr. Price, who wrote the introduction, wherein he says:
The second chap. contains an explanation of the doctrine of life annu. in general, and of the principles on which their values are calculated. At the end of this chap. an account is given of the method of expediting all calculations of the values of life annu., which must, I think, be very acceptable to all who have ever employed themselves in making such calculations. In these two chap. Mr. Morgan has studied to render the subjects of which he treats as intelligible as possible to persons who may be unacquainted with mathematics.
Regarding the mort. table to be employed in the valuation of annuities, Mr. Morgan
The excellent Mr. Simpson has indeed given a table of the values of two joint lives agreeable to the London table of obs., but this table of obs. ought not to be much used, because representing the rate of mort. among the inhabitants of Lond, taken in the gross, it gives the values of lives much too low for the middling and the better sort of people in Lond, itself.
As by these methods the calculations are rendered pleasant as well as expeditious, I hope that ere long some person will undertake them, chusing for his guide the Northampton table of obs., which is perhaps better fitted for common use than any other.
There can be no doubt but that the work contained formulæ for the solving of questions in annuities, and in life contingencies generally, which were new and valuable ; and as Dr. Price does not specifically claim these, Mr. Morgan is entitled to be regarded as the originator.
In 1779 M. de Saint-Cyran pub. his work, wherein the valuation of annu. on lives is treated algebraically, but in a manner much inferior in all respects to that of Mr. Simpson; and six tables are given of the values of annu.-on single lives, on the survivor of two lives, and on the last survivor of three, calculated from M. Kerseboom's table, Although the values in the cases of two and of three lives were only determined by approximation, these tables were just then a valuable acquisition to the science; but their use was entirely superseded only four years after by the pub. of others much more valuable.-Milne.
Table of Annu.
The accompanying column shows his annu. values on single lives at 5 p.c.
In 1780 Mr. Brand published an ed. of Smart's Tables, and therein was contained many problems in life annu., and also various tables of annu, values; all of which have been noticed here in their chronological order.
In 1781 M. Antoine de Parcieux pub, in Paris, Traité des Annu., ou des Rentes à Terme, [DE PARCIEUX.] In the same year M, Flourencourt pub. a work on Political Economy, wherein was contained a T. of annu. for single lives, deduced from De Parcieux's T. of Mort., but making the annu. payable at the end of every year the life survived; with a table of proportionate parts for add, to be made according to the period the annu, survived the year. In 1783 Dr. Price pub. 4th ed. of his Observations, etc. This ed. was very much more comprehensive than the eds. which had preceded it; but it mainly demands notice from us here from the fact that it contained tables of money values deduced from the NORTHAMPTON T. of Mort. The author says hereon ;
The 6th table, showing the mean prob. of the duration of life according to a register of mort. at Northampton, has been inserted in all the former eds.; but it is now given more correctly; and tables deduced from it have been added, of the expectation of life, and the values of single lives, and of any two joint lives at all ages, and for three rates of int. The labour of computing these tables was undertaken in order to set aside all occasion for using the defective valuation of lives founded on Mr. De Moivre's hypothesis; but not having been able to finish these computations till a great part of this treatise had been printed off, I have been obliged to continue the use of the old tables so far as to take from them many of the examples of the solutions of questions in the first and following chapters. The other distinguishing feature of this ed. was, that it contained the SWEDISH Mort. T., with expectations and money values deduced therefrom. The learned author says hereon:
With respect to the tables in particular deduced from the Swedish obs., I cannot hesitate to pronounce that they exceed in correctness everything of this kind which has been hitherto offered to the public; and that nothing is wanting to make our knowledge in this instance compleat, but similar obs. in other kingdoms. By these tables I have been enabled to state minutely the different rates of mort. at all ages among males and females; and to form tables of the values of single and joint lives for each sex, as well as for both sexes collectively; in consequence of which I have been further enabled to determine the increase of the values of annu. payable during survivorship, occasioned by the longer duration of life among females; and thus to furnish a direction of some importance to the various sos, in this kingdom and abroad, for providing annu, for widows,
Here are abstracts of life annu. values deduced from the two preceding tables :
SWEDISH TABLES. 4 p.c.
7.320 65 5.783
In 1783 the Baron Maseres pub. The Principles of the Doctrine of Life Annu. explained in a familiar manner, so as to be intelligible to persons not acquainted with the Doctrine of Chances; and accompanied with a variety of new tables of the values of such annu. at different rates of int., but for single lives, and for two joint lives; accurately computed from obs. In this work was contained a very lucid criticism upon the works of various writers already named by us in the course of the present art. The author was an amateur, and an enthusiast, and is entitled to the gratitude of succeeding generations. His work is very bulky, consisting indeed of more than 700 pages; but the preface contains a very good synopsis of the contents; and from that we take the following:
The principles of the whole doctrine are contained in the first 90 pages, which I would therefore recommend to the attentive perusal of every reader. Of these, the two first pages contain an explanation of the data, or grounds upon which the computations of the values of annu. for lives are built. These are, first, the decrease of the present value of a future sum of money arising from the mere distance of time at which it is to be paid, and the consequent discount that is to be allowed to the purchaser of it for prompt payment (the quantity of which discount it is evident will depend on the rate of int. of money), and secondly the chance which, when the payment of such future sum is not made certain, but is to depend upon the continuance of the life of a person of a given age, the grantor has of escaping the necessity of paying it at all by means of the death of the said person before it becomes due; in order to determine which chance it is necessary to have recourse to certain tables of the several prob. of the duration of human life at every different year of age, which have been formed from obs. of the numbers of persons who have died every year, in the course of a long series of years, at different ages, in divers cities and parishes, and other numerous bodies of men.
In pages 3-6, an account is given of two tables of these prob. that appear to me to be better grounded, and consequently fitter to be adopted, than any others: to wit, those of Mons. Kersseboom and Mons. de Parcieux; and the tables themselves are exhibited. And in p. 7-15, a comparison is made between these two tables, in order to discover which of them represents human life at several different ages as the more durable, or makes the prob. of living greater than the other; and it is found upon the said comparison that till the age of 70 years, the prob. of living are rather greater according to Mons. de Parcieux's table than according to Mons. Kersseboom's; but that after the age of 70 years, or for persons above the age of 70 years, the prob, of living are greater according to M. Kersseboom's table than according to Mons. de Parcieux's.
We shall have occasion to speak of this work again under various heads. That it was calculated to help forward the science of life annu. to a considerable extent is admitted by all who speak of the work.
Professor Tetens, of Kiel, in his work on life annu. and rev., pub. 1785, says: "These annu. calculations have long been known in England. Halley, whom we have to thank for so many useful discoveries, came upon them already at the end of the preceding century. Huygens, before him, had taught how to compute prob. His principles Halley applied to the registers of death, when they were brought into order; and formed the method upon which to compute life and widows' annu. Again: "Of the more recent British authors on this matter, only Morgan and Price have come to my knowledge as having produced anything excellent or orig. In the general theory both agree with Simpson. Morgan has indicated a double method of computing annu., which has in all respects much value. Dr. Price, who with justice much recommends it, seems, however, to ascribe to it somewhat too great pre-eminence. I have not found it so easy or short as not to have had reasons for devising yet another, and for preferring this latter method. One can compare them and judge."
It is the columnar method, similar to that afterwards devised by Barrett, of which he speaks.
In 1785 also the 2nd vol. of the Opuscula Analytica was pub., after the death of its author, Euler; and therein the solution of a question relating to rev. annu. is given. much more arduous undertaking (observes Mr. W. T. Thomson) than in the present day, when so many auxilliary tables are ready to assist the actuary.'
Sir John Sinclair, in his HIST. OF THE REVENUE, first pub. in 1785, enumerating the means which had been employed in raising the revenue, said:
Annuities for lives is another mode that has been frequently practised, and by some is accounted the