No. 4. 



Insurance of Fnrni Biiilclhig^. 



113 



Subscriber, that " all tlic e^penaes and the risk 

 of the whole capital must be met by the small 

 premiums," \Vhy should not the interest ac- 

 cruing on the invested funds go to meet the 

 risk? Or rather, why should the risk be met 1 

 Why even call it a risk at all ! I have sliown 

 from facts which he lias not attempted to " use 

 up" that the premiums in t!ie case would 

 amount to more than yrvcn times the actual or- 

 dinary risk of the insurance. Hence the com- 

 pany would speedily accumulate sufficient 

 funds to defray all its expenses, remunerate tlie 

 losses from fire, and pay large dividends to the 

 stockholders for capital not paid iv, but wl)ich 

 was invested and yieldinuf an interest from 

 anotlicr quarter. But the capital is " pledged," 

 and must therefore be secured by a suitable 

 dividend against extraordinary losses. This 

 is unreasonable. I know of no other method 

 to settle a question of risk, than to ascertain 

 the probable amount fi-om all the data wc have 

 in our possession, and to take that amount as a 

 mean — it may be more, or it may be less. The 

 chances will then be equal. Now according 

 to my estimate, the mean risk on a barn worth 

 $10U0 would be 2S^ cente — the premium 

 claimed is S2 10. Hence " the chance of the 

 jrame (in each particular case) is always in 

 favor of the insurer and against the insured, 

 as more than sixteen to one.^^ — (See page 43.) 

 These data and estimates are a near approxi- 

 mation to the truth. Besides, when the mean 

 risk is ascertained, the fear of greater loss is 

 balanced by the hope of its being less. As I 

 have said, the chances are equal. 



When the company e.\torts such an excess 

 of premium over the mean risk, they stand 

 in little need of any other security for stock 

 which is only pledged. Subscriber might, on 

 the same principle, and with equal propriety 

 demand an exorbitant price for the produce of 

 his " banks of earth and stock of Durham cat- 

 tle," because they are exposed to the risk of 

 being sunk into oblivion by an earthquake. 



In the hurry of his " rough find tumble," 

 Subscriber has disingenuously mutilated my 

 language and perverted its meaning. Instead 

 of saying " the chance of the game is always 

 in favor of the insurer and against the m- 

 sured" he quotes "a game always in favor of 

 the insurers and against the insured." In a 

 lottery the chance is always a?ain.st him and 

 yet he may draw a, prize. "Comment here 

 is unnecessary." If he cannot " use up my 

 facts" by fair argument, he can hardly do so 

 by perversion. | 



Again, Subscriber says "when money is 

 paid for insurance, value is received — because i 

 it is as valuable for a man to diminish his losses I 

 as to increase his profits.'" This assertion is| 

 what he terms '-a mere hap hazard kind of I 

 affair." It may be true or untrue. If there 

 is no loss sustained, there can be no value re-| 



ceived. If a man has lost nothing he cannot 

 diminish his loss. What value lias lie re- 

 ceived to remunerate him tor the !j>7*2S paid 

 to insurance companies ] He has " not been 

 burned out once," — how then has he dimin- 

 ished his losses by fire to s^iTiiS less than no- 

 thing, so as to balance his .iccounts ! Did the 

 protecting a^gis of an insurance cmse the de- 

 vouring element to puss by iiis ])ioperty, and 

 thus afford him value for the money expended ! 

 So tar has insurance been from proving to him 

 " a good bridge over a deep and dangerous 

 stream." it has led him directly into "a shop" 

 where he has gambled away $728 and won 

 nothing. This is " using up" his own facts 

 with a vengeance. 



The objectors say there is a radical differ- 

 ence between in.surance and lotteries, as much 

 as between "incendiaries who set fire to 

 houses, and the generous hearted firemen who 

 put fires out." la the one they tell us there 

 are many blanks and few prizes. The chances 

 arc a hundred to one against the adven- 

 turer. The other has nobl.uiks — the insured 

 is certain of a prize, the value of which is 

 determined by himself. The reverse of this 

 appears to be- true. An insurance scheme 

 consists wholly of blanks. There is not one 

 prize in it till created by casualty. The in- 

 sured can only obtain value by the destruction 

 of his property. Until that disastrous event 

 happens he draws blanks, and only blanks 

 continually, as Subscriber has done for 26 

 years past, and probaoly will continue to do, 

 if he should live, till he has "gambled" away 

 several times more money than his property 

 is worth. It is a game in which the only 

 hope of winning hangs on misfortune. If the 

 lightning of heaven is stayed; and if no /or- 

 htnate accident, or kind incendiary shall kin- 

 dle the fire, the player must do so himself, or 

 be content to lose tlie gauie. 



Subscriber admits that " lotteries arc fonned 

 and operate just as Observer says," — and I 

 have shown that it is also true of insurances. 

 He acknowledges that "the plan proposed by 

 Observer is a very good one ; and hopes that 

 it will grow into general use." I cordially 

 thank him for this expression of good rrpinion, 

 and shall expect him to aid in carrying his 

 own recommendation into efrect. But when 

 he says " as to principle, Observer's own plan 

 of insurance is as much a species of sramhling 

 as the institution he complains of" I must 

 immediately lo.«e the hand of fellowship. 



In tlie proposed plan the members give and 

 receive similar and equal pledges, and incur 

 similar and equal responsibilili'^s. The pre- 

 miums paid amount to no more than the losses 

 sustained — and the money is confined to their 

 own body. 



In the plan under discu.ssion, the insured 

 give a certainty for an uncertainty — money 



