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Page:Popular Science Monthly Volume 19.djvu/501

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ORIGIN AND HISTORY OF LIFE INSURANCE.

to seven, the association should come to an end. Accordingly, in 1870, the requisite number being reached, steps were taken to have the property (which was then valued at $200,000) divided.

The advantages the tontines seemed to offer made them very enticing. The larger the number of deaths a prospectus would promise, the greater the expected gain to the survivors. No reliable calculation or precise prediction of the mortality was necessary, since they were to be guided by the actual experience only. But the very ease with which they could be formed tended to make them deteriorate into little better than mere lottery schemes, used by designing men to plunder the credulous.[1]

At present the tontine principle does not enlist our sympathy, being too selfish for our times, but it probably answered a good purpose in its day. Life and property were insecure, the investment of small sums difficult, the usury laws stringent: how natural for men to look to immediate enjoyment, when provision for the future was surrounded by so many uncertainties!

Nor is it likely that Tonti was the real originator of the idea. There is reason to assume that similar customs had taken root in Italian cities long before his time. Probably the same conditions and needs of society also led to the practice of purchasing life-annuities. It seems to have been a favorite mode of raising money, among the flourishing towns of the Netherlands, since the early part of the sixteenth century. On the payment of a certain sum to the party granting the life-annuity, a fixed annual income could be secured during lifetime.

Two other methods of making loans were also known to these old communities, namely, terminable and perpetual annuities.

Terminable annuities are such as are redeemable after a fixed number of years, and bear interest until maturity. That is the usual mode of investing funds at present.

Perpetual annuities are those that bear interest for ever, while the principal never becomes payable. Many European governments have funded their debts upon that principle, the most noted being the French rentes and the English consols.

The people of the Netherlands, that so early displayed commercial and political activity, continued to grow in importance until, by the middle of the seventeenth century, they ranked among the foremost nations of Europe. The freedom they enjoyed fostered material prosperity and encouraged the arts and sciences. Their statesmen and officials were often men of the highest attainments.

  1. These tontine associations must not be confounded with the so-called tontine life-insurance policies issued by some companies at the present day. These latter have simply borrowed the name, while in other respects they are like ordinary life-insurance policies; only that, instead of having dividends declared annually, they are held back for fixed periods, say ten or fifteen years, and then distributed among the surviving members.