232 ON MUTUAL ASSUKANCE, 



the five years, and for this he has received an equivalent, viz., 

 the security which he has enjoyed during the five years, that in 

 case of his death a certain sum would be paid to those for whom 

 it was his intention to provide. 



It is not my object in this paper to consider how the present 

 value of a policy should be determined, but in a merely business 

 like point of view, it should be such a sum as would enable a 

 member, in case his own society was wound up, to compound 

 with another similar society to insure his life at the same pre- 

 mium which he had hitherto paid, although his age was greater 

 by five years. 



If upon winding up a society it were found that the funds 

 were not sufficient to pay back to each member the present value 

 of his policy, it is quite clear that each must abate proportionally. 

 Whatever per centage is wanting on the whole, the same per 

 centage must be deducted from each. I cannot see that there 

 would be any other just or legal way of apportioning the loss, 

 and it appears to me equally clear that if, instead of a deficiency, 

 there were a surplus, it should be distributed in the same pro- 

 portion ; that is, in proportion to the present value of the policies 

 or to the sums invested and risked in the Society by the several 

 members. This is precisely in accordance with universal practice 

 in all cases where several persons are jointly interested in any 

 undertaking. Profits are always divided in the same proportion 

 in which losses, if incurred, would be apportioned. It may be 

 urged, as an objection to this method, that, under certain circum- 

 stances, some of the members would receive a larger share of the 

 surplus than they had contributed ; but it would always be found 

 in such cases that if a loss had been incurred, the same members 

 would necessarily have borne the larger share of the loss, and in 

 the same proportion. 



In a purely proprietary company, under proper management, 

 the insured incur no appreciable risk, and receive no share of the 

 profit. The shareholders take all the surplus, to which they have 

 contributed nothing. They are simply paid for the risk which 

 they have incurred, small though it be. The insured enjoys a 

 security for which he pays, and the shareholder undertakes a 

 certain risk for which he is paid. To say that this is inequitable, 



