RECAPITULATION.

First. On Mortality Table, I recommend that the American Experience Table be adopted for the State valuation of life and endowment policies throughout the whole Union.

That the Table be subjected to the test of the New Experience of American companies, to be collected and tabulated in five or ten years; and that thereafter the table shall be modified, if necessary, to accord with such new facts and experience.

That measures be taken immediately to perfect the present table by adding thereto the numbers living and dying from age o to 9, inclusive.

Second. Rate of interest. I beg leave to recommend four and a half per cent as a safe and judicious standard for an uniform rate for each State in the United States and Territories.

Third. I would suggest, in the absence of any American Experience for the State valuation of annuities, the Government Annuity tables of Great Britain, as reported by Mr. John Finlaison, in 1850, or the very elaborate and complete tables of Mr. Jardine Henry, now in process of completion, with five and one half per cent interest.

Fourth. I would recommend net valuations for all lives healthy on entry (impaired lives to be judged of by the special circumstances), unless the rates of premium run below the net legal standard rates. In all cases where the rates of premium are less than the net rates according to the legal standard of mortality and interest, net valuations should not be allowed, but the principles of gross valuation should be applied, deducting from the present value of future premiums a sum equal to the average percentage of expenses during the whole period of the company's existence, in no case less than ten per centum. Negative values never to be allowed as assets.

Fifth. I would suggest that all life companies should be prohibited from declaring or paying any dividends to either stock or policyholders whenever the capital or reserve is impaired to any extent whatever; the capital at par, to be reckoned as a liability.

Whenever, and only in cases where, a company's capital is impaired more than twenty per cent thereof, and the reserve as per the legal standard, impaired more than ten per cent thereof, all Licenses or Certificates of Authority, to companies of other States of the United States to issue new policies to be revoked, and all domestic companies to be dissolved as insolvent corporations, in accordance with State laws. This latter provision, as to an impairment of the reserve, to be applicable only to companies having over a thousand policies in force insuring dollars.

least two millions of

WESTERN AVE., ALBANY, N. Y.

October 18, 1871.

WILLIAM BARNES.

ON THE RATE OF INTEREST.

A LETTER FROM HON. ALEXANDER DELMAR, Late Director of the Bureau of Statistics, Honorary Member of the Société Statistique of Paris, etc.

DEAR SIR: It would afford me great pleasure to prepare for the National Insurance Convention a complete review of the subject of Interest, and the inductions arising therefrom; but lack of time forbids, and I can only glance at it, and make a few hurried conclusions, which, though drawn from somewhat imperfect data, may nevertheless stand the test of closer analysis of the facts. At all events they will serve to throw open a hitherto almost entirely unexplored subject.

A number of questions occur in this connection:

I. What is a rate of interest?

2. What is the general history of the rate of interest?

3. What is its history in this country?

4.

What are generally the ultimate causes of a rate of interest? 5. What influences at present affect, in this country, the rate of interest?

6. What is generally the present tendency of the rate of interest?

7. What is its tendency in this country?

8. To which might be added this question: What are the prevailing sophisms concerning the rate of interest?

I. WHAT IS A RATE OF INTEREST?

A rate of compensation for capital loaned. As a general thing, however, interest is applied to money only; and it is from this fact that spring most of the erroneous theories prevalent on the subject, It is also common to still further and still more erroneously limit the meaning of the term. The "rate of interest" is used to indicate the legal rate-the rate fixed by law: e. g., "the rate of interest in New York is seven per cent," this being

the legal limit in that state.
springs another crop of errors.
pointed out hereinafter. For the present it is sufficient to know
that a rate of interest means simply a rate of compensation for
money or property loaned. This rate may either be stipulated
between the parties, limited by law, or determined in open mar-
ket. It is the latter, viz., the open market price of or compensa-
tion for loans of money or property that I shall hereinafter refer
to by the term rate of interest, unless otherwise specified.

From this looseness of expression
Some of these will be briefly

Interest is a modern term. The word usury was formerly used to mean the same thing. Now the latter word is only employed to express excessive interest; though for my own part I do not believe that any rate of interest, freely agreed upon, is excessive. On this subject, however, Bentham has already said all that is worth saying, while O'Callaghan has, on the other hand, extolled every absurdity on the subject which the former so mercilessly derided.

II. GENERAL HISTORY OF THE RATE OF INTERESt.

My exceedingly limited time will only permit the merest glimpses into this portion of the subject. Mention of the earliest rate of interest I can at present recall will be found in Buckle, (Hist. Civ., Appleton's edition, i, 54), and relates to India, where, in B.C. 900, according to the Institutes of Menu, the minimum legal rate was 15 and the maximum 60 per cent per annum. This information merely furnishes a ground for conjecture that the market rate on the best security was about 15 per cent. Boeckh, in his Public Economy of the Athenians, furnishes more definite information. The common market rates in Athens were 12 to 18 per cent; no date given. (Little and Brown's edition, p. 181.) In the time of Pompey the Great, say 100 to 50 B.C., the rate in Tenos varied from 8 to 12 per cent. In the third century before Christ the state bank in Ilion paid 10 per cent on state security. (Ibid, p. 182.) Interest was lower still in Rome in the age of Cicero. (Id., p. 174.)

From these rates, which do not appear to have been much, if any, higher, than those which prevail at present in the western and southern states of America, the Pagan history of interest is silent until the obscurity that characterized the Dark Ages partially cleared away. This is part one. It begins in the obscurity of