COINING BLOOD INTO BOODLE.
SOME months ago the ICONOCLAST paid its respects to the
old line insurance companies. It demonstrated beyond
the peradventure of a doubt that they are but so many
cut-throat gambling concerns. It proved that they are
consuming the substance of the people by returning in
satisfaction of matured policies about one-third what they
collect in premiums. Of course, the expose aroused the
ban-dogs of Dives, and they made the welkin ring from
Tadmor in the wilderness to Yuba Dam. The ICONOCLAST
became a target for oodles of cheap wit and barrels
of black-guardism by the journalistic organ-grinders for
the insurance buccaneers; but as yet none of the
megalophanous-mouthed micrococci have attempted to answer
its arguments or to demonstrate that the indictment was
too drastic. A gentleman who has made an exhaustive
study of the insurance problem sends me some valuable
data which I propose to draw upon from time to time, not
with the expectation of making high-toned thieves ashamed
of themselves and thereby effecting their reformation, but
to keep their newspaper panders and potwallopers snarling
and snapping until general attention is attracted to
the consummate meanness of their masters and thereby
curtail somewhat their powers of despoilation. The old
line life insurance fake is the most colossal scheme of
predacity known to human history. Enough money is
annually filched from the people to clothe every pauper
like unto Solomon in all his glory and feed him upon the
fat of the land. Millions of Americans are today denying
themselves creature comforts to pay premiums on policies
that will never yield their dependents one penny. The old
line fraud flourishes simply because, in the language of
the erstwhile P. T. Barnum, the American people love
to be hood-dooed and humbugged. I do not by this mean
to reflect upon the commercial integrity of all men
soliciting old line insurance. Many of them are elegant
gentlemen who have engaged, quite unconsciously, in very
bad business. The Deity should forgive them for they
know not what they do. They really believe that they
are engaged in a work of philanthropy, while devoting
their best energies to the promotion of a fraud. The
average policy-holder knows little or nothing about life-insurance. He desires to provide for his dependants; but
being unable to accumulate much property, he scrapes
and saves and pays to some remorseless robber all his surplus
money. He wants to be doubly sure that the company
is solvent and will remain so, hence he selects one
boasting enormous "assets." It does not once occur to
him that the aforesaid assets have been accumulated in a
very few years by bumping the heads of other suckers.
He pays the rate prescribed without considering whether
it be high enough to keep the company solvent or low
enough to stamp his investment as commercial sanity. He
is little concerned about "dividends," but wants to be
assured that at the time of his death his heirs will be
paid a certain number of dollars. So he goes up against
a mammoth slot-machine which absorbs dollars while it
rolls out dimes. He knows that the widow so-and-so was
paid so much insurance, and takes it for granted that it
is a good thing. He sees the little pile of coin poured into
her lap, but he does not see the greedy hands of the
corporation despoiling a hundred pockets to make up
treble the amount. He hears much about what the Flim-Flam Life Insurance Co. has paid on policies, but nothing
about what it has collected in premiums. So he makes his
old threadbare coat do for another decade, lets his wife
go without a new gown, feeds his children on slapjacks and
sop and surrenders for life insurance the surplus thus
saved. No "cheap insurance" for him!—he wants to get
into a "time-tried" financial Gibralter. He is told by
the agent of an old liner of its enormous "legal reserve,"
and innocently supposes this to be a portion of its available
assets—the one thing which makes it "solid." He
contemplates a long array of figures and assumes that
Old Mortality might sweep the land with War or pestilence
without affecting the solvency of his patron saint. The
agent neglects to inform him that the "legal reserve,"
which looms up like a seventy four in a fog, cannot be
utilized in the discharge of death-claims, that insofar as
the average policy holder is concerned it is simply a
beautiful legend on an advertising blotter. When I was editor
of the San Antonio
Express the philanthropic proprietor
gave me a block of land in the city of Laredo in lieu of a
raise of salary, but neglected to supply me with a deed
to same. The land is mine, all right enough, but is no part
of my available assets—it's my "legal reserve." Like its
insurance namesake, it's a liability to the exact extent that
it's an asset. It is an awfully nice thing to have, but
adds never a cent to my solvency. My correspondent
points out that it costs policy holders in old line companies
more to maintain the legal reserve than it does to
provide for losses by death, and adds that this is proven
by the fact that all such companies doing business in the
State of New York must have on hand in cash, or in
invested assets approved by the insurance department, the
reserve belonging to all the policies which they have in
force. This means that they must retain or keep invested
a sum equal to about two-thirds of all the premiums paid
on all existing policies. The moment they part with any
portion of this reserve for any purpose whatsoever, they
are declared insolvent and wound up by a receiver. In
other words, the corporation is d——d if it does and the
policy holder is d——d if it doesn't. That the latter gets
the sulphur bath goes without saying. The four largest
old system companies doing business in New York had,
on Jan. 1, 1893, $48,265,798 more in legal reserve than
the total amount which they have paid in death losses and
endowments during their entire existence! With this fact
before him, how in the name of heaven any sane man can
be induced by an old system company to enact the role
of sucker surpasses my comprehension. Five years ago
the net assets of the largest old line life insurance
company in the world amounted to $165,000,000, of which
more than $158,000,000 was legal reserve. Had a shrinkage
of 10 per cent occurred in the value of its investments
its reserve would have been impaired and the corporation
declared insolvent. So long ago as 1878 the Union Mutual
Life Insurance Co. acknowledged over the signatures
of its general officers that it had collected from its policy
holders more than $45,000,000 "beyond the necessities of
our business." It felt so badly about this that it
proceeded to raise the cost of management from $5 to $11.57
on the $1,000 and shove up the premium something more
than 20 per cent! It is believed that the gutta percha
conscience of the general officers is now reasonably easy—
that "the necessities of our business" are not on a parity
with the ability of the corporation to yank the legs of the
guileless yap. In 1873 this company paid in dividends
$29 on each $1,000 insurance in force; in 1895 it paid—
despite the increased cost of premiums—but $2.16. All
the old line companies, so far as I know, have been
increasing premiums and cost of management while decreasing
dividends. "Loading" is another scheme by which
all old line or legal reserve companies rob the people.
"Loading" means simply the placing of a sufficient burden
on the patron to freeze him out before maturity of
his policy and enable the company to pocket all he has
paid in premiums. The idea of the old liners is to squeeze
a victim dry and get rid of him—to "load" him until his
financial back is broken. That the system is proven by
the fact that only one policy in seven is ever paid. Six
out of every seven people who insure in the old line
companies pay heavy premiums for a longer or shorter period
and never receive back a cent. They lie down under their
"load." By such methods these systematic blood-suckers
acquire those vast assets that make them so "solvent."
By such practices they are enabled to pay $75,000
salaries to their presidents while the chief magistrate of the
Republic must worry along on less money. By the
pernicious system of "loading" a patron is charged four
times as much for operating expenses at 60 years of age
as he is charged at 25, although it costs the same to collect
his premiums and furnish a receipt therefor. The idea is
that the older he grows the more likely he is to prove s
loss to the company, hence his burden is made too grievous
to be borne. Life insurance should be a public blessing
instead of a bane. Properly applied it would well-nigh
eliminate pauperism. As matters now stand it is too often
a promoter of poverty instead of a preventative. To
shelter one family the old line companies turn two or more
into the street. To feed the few they starve the many.
They coldly speculate in the holiest affections of the
human heart. They remorselessly coin blood into boodle.
They wring the last farthing from the thin purse of labor
for their own enrichment. They obtain patronage of the
ignorant by false pretenses. They permit the people to
regard their legal reserve as available for all purposes.
They parade eight and nine-figure assets as things to be
proud of, when they are in reality the fruits of shameless
despoiliation of the poor. They pose as benevolent
institutions while the land is filled with those whom they have
robbed and wrecked. The government should suppress
these eminently respectable gambling games. They have
caused more sorrow, destitution and crime than all the
cards and dice this side of the dark dominion of the devil.
The horse-leech's daughters should be pulled off the body
politic. Not only should the government suppress these
shameless skin games which collect gold and distribute
copper, but it should supply life insurance to heads of
families at cost and make it compulsory. It should be
an offense against the law, punishable by imprisonment
for a man to bring a child into the world without first
providing for its support in case of his death or disability,
and in no other way can the poor so easily make such
provision as by a system of life insurance conducted for
the benefit of the many instead of the enrichment of the
few.