BY M. B. PELL, ESQ. 231 



principle to appropriate the contributions from the wheat con- 

 sumers to pay the losses occasioned by the maize consumers, for 

 every man's contribution should be regarded as his own. I think 

 it will be conceded that this mode of apportioning the profits 

 would be directly at variance with our most commonly received 

 motions of equity, and that the principle involved would, if fully 

 carried out, render mutual contracts to be performed in future 

 practically of no effect. 



An estimate of the actual cost of the several commodities pro- 

 duced would furnish useful data in forming a new society for 

 similar purposes ; and the calculations of how much each member 

 contributed to surplus might afford an interesting arithmetical 

 exercise ; but in determining how the profit in hand should be 

 divided such estimates and calculations would be wholly 

 irrelevant. 



I will now endeavour to explain what I consider to be the 

 true principle upon which profits should be distributed in Mutual 

 Life Insurance Societies. 



Suppose that a number of persons mutually insure their lives. 

 Each member contracts to pay a fixed sum annually during his 

 lifetime, and the society contracts to pay a certain sum upon his 

 death. At the end of five years, suppose a fund will have accu- 

 mulated in the hands of the society, and at the same time each 

 policy will have acquired a certain value. Suppose now that it 

 were determined to wind up the Society, and to divide the fund. 

 Each member should in the first place of course receive the 

 present value of his policy, or the value of his claim against the 

 society. If the payment of these sums should exhaust the fund, 

 there would be an end of the matter : the Society would have 

 proved exactly solvent and no more, and no one would have lost 

 or gained anything by it. 



The present value of the policy on the life of any member is 

 his share of the fund, being precisely what he would lose if the 

 fund were annihilated, and what he would receive if the Society 

 were wound up. It is, in fact, the sum which he has invested 

 and risked in the concern. It is not, of course, so great as the 

 full amount of the premiums which he has paid, with interest 

 added, for a portion has gone to pay for losses by deaths during 



