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Letter from Gov. Thomas to Mr. Peabody.
State DepartMENT, Annapolis, Md., Oct. 201h, 1848. Sir-I have the honor herewith to transmit the inclosed preamble and resolutions, passed unanimously by the General Assembly, at its last session, tendering the thanks of the State for the generous and patriotic interest manifested by you in the restoration of the public credit, at a time when Maryland, in common with many of the other States of the Union, yielding to the weight of her financial embarrassments, was compelled, temporarily, to suspend payment upon both her foreign and domestic debt; and more especially, for your disinterestedness in relinquishing all claims to compensation for services rendered, and to which, upon every principle of law and justice, you were fairly entitled. Instances of such devotion on the part of a citizen, to the public welfare, are of rare occurrence, and merit the highest distinctions which a commonwealth can bestow. To one whose actions are the result of impulses so noble and self-sacrificing, next to the approval of his own conscience, no homage can be more acceptable than the meed of a people’s gratitude, no recompense so grateful as the assurance of the complete realization of those objects and ends whose attainment has been regarded as of higher value than mere personal convenience or pecuniary consideration. The Legislature, in the passage of these resolutions, has not misconceived the sentiments of its constituents.
The people of Maryland are proverbially magnanimous and patriotic, sensitively ve to whatever concerns their private or public honor, and profoundly grateful to all by whom one or the other has been vindicated or sustained. Exempt as they had always been, except for a single. year and for a limited amount, from direct contributions to the Treasury, and unexpectedly overwhelmed with an enormous debt, it is not wonderful that delays and difficulties should have been encountered both in maturing and enforcing the necessarily complex details of any system of taxation at all adequate to meet the annually accruing interest, and ultimately to extinguish the principal of her public obligations.
The work of restoring the credit of Maryland, beset as it was with embarrassments, and unaided by the light of experience, was, nevertheless, undertaken with a zeal commensurate with the importance of maintaining, unsullied, the plighted faith of the State, and with a decision and energy calculated to ensure success. By the act of December ses. sion, 1846, chap. 238, the Treasurer was directed to resume payment of the current interest on the public debt on the first day of January, eighteen hundred and forty-eight. By the same law, the commissioner of loans was authorised at any time after the first day of October, eighteen hundred and forty-seven, upon the delivery to him of the coupons and certificates of interest due and unpaid upon the public debt, to issue to the holder or holders thereof the bond or bonds of the State, for the amount of such coupons or certificates, redeemable at the pleasure of the State, bearing an interest at the rate of six per centum per annum from the first day of October, eighteen hundred and forty-seven, and payable, annually, at the Loan office in Maryland.
The effect of this latter provision of law was to convert into principal, the entire amount of the interest on the main debt of the State which remained unpaid, and thereby to add to the burdens of the people an
additional annual charge for interest, at the rate of six per centum per annum, upon a sum not far short of a million of dollars. The first day of the present month, was the period at which, under the operation of the law, payment of the interest, upon the new funded debt, was to commence. On the same day a quarter's interest on the main debt, payable at the Loan office, and also the semi-annual interest, payable in London on the first day of January next, were likewise falling due. That day, of course, formed a crisis in the financial affairs of Maryland, and presented a fair test of the ability of the Treasury to discharge, in full, all the engagements of the State.
I have purposely delayed the communication of the inclosed resolutions until the period above referred to had passed by, believing that I could render you no more acceptable service than by accompanying their transmission with the intelligence of the entire success with which the efforts to restore the credit of the State have been crowned. It is my privilege to inform you, that the liabilities of the State, payable on the first of October, have been promptly met without the slightest inconvenience to the Treasury; and that, after payment of the quarter's interest then due, of the sterling interest due on the first of next January, and the interest on the funded arrears, there remained a surplus, which is every day increasing, much more than sufficient to cover the balance of the January instalment, payable at the Loan office in Baltimore. The credit of Maryland is thus fully restored, her public honor redeemed, every suspicion of bad faith removed, and no reasonable doubt remains as to her ability to maintain the proud and elevated position which she now occupies.
To you, sir, who have had no inconsiderable agency in the accomplishment of this gratifying result, the thanks of the State were eminently due. The action of the General Assembly reflects faithfully the feelings of gratitude which your generous devotion to the interest of the State has awakened in the bosom of every good citizen of Maryland; and while I am happy in having been made the organ of communicating this well-merited tribute to your public and private virtue, I avail myself of the opportunity which the occasion affords to assure you, that the sentiments embodied in these resolutions have commanded my most hearty and cordial concurrence. I have the honor to be, with great respect, your obedient servant,
Philip F. THOMAS. GEORGE PEABODY, Esq., London.
Letter from Mr. Speed to George Peabody, Esq.
BALTIMORE, November 13th, 1848. My dear Sir—The Governor of Maryland, referring, I presume, to my late correspondence with you on several public topics, has chosen to make me the instrument of transmitting to you the Resolutions of the Legislature, passed at its late session, tendering you the thanks of the Government, for your effective zeal and prominent agency in upholding the honor of the State, in its late afflictions, in a foreign land, and in presenting its integrity in true lights to foreign minds. When you reflect that these resolutions convey the thanks of a sovereign State
one of those that laid the foundation of this Republic—for services rendered her reputation abroad, you will not fail to prize the distinction, but will, I know, regard it with the emotion it is so well calculated to awaken. In social life, we are often assured, there is no higher impulse than that which prompts us to shield from accusation the good name of an absent friend, and the charities of our nature are never more beautifully displayed than when employed in covering the blemishes of those with whom we are connected by kindred ties; but the love of country is a nobler passion, the impulses of patriotism are nobler emotions, and what prouder political duty can the citizen discharge than that of upholding, in a foreign land, the good name of his country till truth shall come to rescue its impugned reputation. I must confess I should covet it before the lustre of arms, the achievements of war, the triumphs of ambition, or any of the more captivating successes of genius. And it is your felicity, sir, to be in the position I thus contemplate; and your happiness, moreover, to be assured that your country fully appreciates your services. In this instance, most certainly, the Resolutions of the Legislature fulfil the theory of Representative Assemblies—they give trve utterance to the popular voice, and true expression to the popular sentiment. And I need scarcely refer to the perfect unison that exists between the sentiments of the Legislature and those of the Governor in regard to your services. His Excellency's letter to you, with a copy of which he has honored me, speaks very fully for itself on this head.
Repudiation is stricken down in Maryland, and will continue motionless. In other parts of the confederacy, it is sinking back into those gloomy abodes of bad minds and vulgar breasts where it was engendered, and which, as harbors and refuges of vice, unhappily for mankind, exist in all countries. Their great monitor, after all, is a sound public sense; and this is awakened in Maryland in its most formidable power. I am happy to report to you that our revenue laws are even more effective and fruitful than we had hoped for them. The amounts returned into the Treasury and the steadiness of the collections, have gone beyond the public expectation. This, while it denotes diligence and fidelity in the administration of the laws, proves also that which is before all and above all end our chiefest pride-a devoted willingness on the part of the tax payer. It is not the Government that is paying this debt, it is the noble hearted people of Maryland. They, themselves, have spontaneously enacted the laws under which these great contributions are drawn into the Treasury; and their willing response to the tax gatherer at their doors, carries out in practice the enlightened and just spirit of their legislation. Permit me, in conclusion, to assure you of the gratification it has afforded me to have been selected as the medium of a communication so creditable to the Legislature and honorable to yourself.—The spirit that has prompted these Resolutions is worthy of the enviable relation in which you stand to us; and I feel a pride in believing that, disinterested and generous as have been your efforts, they have been most fully met by the sensibility they have excited, and the just appreciation in which they are held by every citizen of Maryland. I pray you to believe me, as always, very faithfully, yours,
J. J. SPEED. GEORGE PEABODY, Esq., London.
PRINCIPLES OF LIFE INSURANCE.
From Chambers’ Edinburgh Journal.
Mutual and Proprietary Life-Assurance.
Life-assurance being a subject of great and growing interest to the public, we deem it not superfluous to make a few remarks on the comparative merits of the two modes—the mutual and proprietary-which now contend for notice.
The Proprietary System is that of oldest standing. Life-assurance was first (speaking generally) practised by joint-stock companies advancing money to sustain the risks of business, and looking for a profit on the capital risked. And this plan was very suitable at the time, for, with the defective means of calculation which then existed, life-assurance business was as much a matter of speculation as would be a transaction in hops or foreign wheat at the present day. But afterwards, when tables of mortality were formed, and the decrement of human life came to be reduced to a simple mathematical problem, it was seen that life-assurance might be conducted by mere societies of the persons assuring, whose payments should form the fund for discharging the emerging claims, and who should appropriate to themselves any surplus which might arise after all such claims were satisfied—that is to say, receive back what, in a company, would be distributed amongst the shareholders as profits. The plan of Mutual Assurance, as this last is called, has within the last thirty years made a considerable advance upon the older proprietary system; yet the great bulk of the life-assurance business of the country is still transacted in proprietary offices, the numbers of which are as more than three to one of the mutual offices.
After a careful examination of the two plans, with some benefit from practical experience, we do not hesitate to declare our conviction that the mutual system is the only one which the public at large are concerned to support. The proprietary system, originating only by favor of the darkness in which the subject was at first buried, could only, it appears to us, have since been supported by the efforts of interested individuals. It is perhaps to be considered by mercantile men as a legitimate mode of making money; but, examined more rigidly, and by persons like ourselves, perfectly disinterested, it seems by no means a blameless one. To illustrate this, let us see how a life-assurance company generally proceeds. A set of speculators start it with a large apparition of capital, of which only a few thousand pounds need be paid up. By means of a handsome-looking office, incessant advertising, and active
a managers and agents, business is obtained. After a few years, this has generally increased considerably, and large dividends begin to be made amongst the shareholders. In one instance under our immediate notice, ten thousand pounds of paid-up capital now stands, after seventeen years' business, at the value of £70,000, in the stock-market, being £600 per cent. of premium. What is it that has thus so much increased its value ? Only those surplusages of payment by the public which, in a mutual
office, would all come back to the assured. Generally, it is to be remarked, proprietary offices, besides their usual scales of rates, where as in death's own list, there is no return, have a scale where the payments are somewhat igher, and the assured are to have periodical bonuses as in the mutual system; a concession much like the celebrated one which vice is said to pay to virtue. But here the benefits sink far below what are to be usually obtained from a respectable mutual office; as they well may, seeing that the company looks for a profit to itself, which is just so much abstracted from the pockets of the assured without any equivalent. Were we to draw out tables contrasting the sums which individuals will realise in a course of years under the mutual system, with those which the same payments will obtain under the proprietary or trading system, even where shares of "profits' are professedly divided among the assured, our readers would be startled at the difference of results. It would appear almost incomprehensible that the proprietary system should have contrived to exist so long, when a rival plan, free from all selfish principle, and securing to the public the utmost possible advantages, was daily contending with it for public favor. This, however, is no real mystery, when we consider the ignorance of most persons on the subject of life-assurance, and what a powerful interest is concerned in maintaining the repute of the proprietary system, and bringing business to its bureaux.
The leading pretext of the proprietary system is, that the subscribed capital affords a guarantee or security for the payment of claims which the mutual system lacks, and that the assured is thus compensated in safety for what he wants in money. But the hollowness of this pleading is seen in a moment, when we consider that a combination of assurers, each paying fully what science says is necessary to make good their mutual engagements, is a transaction free from all risk, in the ordinary sense of ihe word, and only can fail in the event of a change in the laws of nature, or such an alteration in the condition of the country (affecting the value of money) as no kind of security would gainstand. Attempts have been made to liken the case of a life-assurance company to a bank of deposit, and to make out from that analogy that a stock is necessary for the security of the assurers. But the cases are totally diverse, seeing that the assurance company has not, like a bank, to trade with its deposits, but only to lay them out to the best advantage in permanent investments, and thus hold them till they fall in the due course of time to be returned. A bank which appropriated to itself half the ordinary rate of interest for deposits, on the pretence of its having a few thousand pounds of stock to afford a security, would be in strict analogy, but no other. In fact, the capital is a mere stalkinghorse: there is no instance of its ever being called into requisition. Were such an instance to occur, it would probably prove a mere trifle in comparison with the extent of the obligations. We may go farther, and say that this capital is not only unnecessary, in consequence of the unavoidable formation of large funds from the mere payments of the assured, but, if on a large scale, it would be a positive disadvantage, as, if there is any real difficulty in the conducting of life-assurance business, it is in the disposal of the funds. Capital for life-assurance can at the