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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 th
e 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 a 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.