The Sun.
London, England, 1852-12-28 00:00:00

DECLARATION OF THE MANCHESTER
CHAMBER OF COMMERCE.
The following very important paper, bearing the sig-
nature of Mr. Bazley, as President of the Manchester
Chamber of Commerce and Manufactures, and issued by
" order and on behalf of the directors" of that body, has
been made public in Manchester. It appears to have
been immediately called forth by a letter, which we also
publish, addressed to Mr. Bazley, in his official capacity,
by Mr. J. Young Caw, on the 23d of September last—
at the time when it will be remembered that public
attention had just been directed to the subject of Life
Insurance by the appearance of one or two pamphlets,
by the prominence giveh to it in our own columns, and
by other causes. Mr, Bazley's letter is a most valuable
document, and we direct attention to it with peculiar
pleasure, seeing that is expresses views, and contains
statements, which correspond closely with those which,
from the commencement of the controversy, have been
adopted and .enforced by ourselves. We give in the
first place the letter of Mr. Caw, and in the second the
reply which it called forth from Mr. Bazley :
" Bank, Mosley-street, 23d Sept., 1852.
" Dear Sir,—ln bringing before your directors the
state of the life assurance offices, I believe I am doing
that which in some shape or other has already been done,
for the public press has recently so often alluded to it,
that in some degree or other it must have been considered
by all of them. Still, as there are some points of im-
portance which deserve special consideration, I trust I
may be excused in endeavouring to select from many
objects of attention, those which appear to be the most
practical and most prominent. Life insurance, con-
ducted upon prudent principles, is of immense advantage
to the community. - Having enunciated this proposition,
so universally admitted, it remains to examine what are
prudent principles ? A prudent man will be desirous, when
he insures his life, to know that when he dies the engage-
ment will be duly met. This brings on the consideration
of the office in which he ought to insure. Now, the returns
recently published by authority of Parliament, give a
certain amount of information as to companies formed
under the 7th and Bth Vict., cap. 110 ; and as since the
passing of that act, 105 assurance companies have regis-
tered themselves, it may tend to assist some if the state
of these accounts be considered. I have not the slight-
est hesitation in pronouncing a very large proportion of
these offices to be practically insolvent ; and there is not
any one of common judgment in business matters who
can arrive at any other conclusion after examining the
accounts these officers have furnished. The first item
that appears of importance is preliminary expenses,
under which vague title most of the offices place a•large
amount of money. The second is, the large sum for
directors's fees. The third is, the large law expenses.
And the fourth, the charge for establishing agencies.
These matters require much attention. The next point
is, a great reduction of premium. This has been carried
to an excess, and ruin must be the consequence. Many
of the offices to which allusion has been made are esta-
blished in London, and have placed in Manchester local
boards as an inducement for the people at Manchester
to insure. 'lt is to this point particularly that I beg the
attention of your directors. No legislative enactment
can interfere in this matter with success. Any such en-
actment would be an opposition to free trade. But the
moral influence of your society in expressing an opinion
upon the following points, which every insurer ought to
inquire into, may be of Service. How this is to be done
must be left to the judgment and discretion of your di-
rectors. Persons have lent their names as local direc-
tors, without holding shares in the company, and with-
out being insured in their own office. The deduction
from this is, that weak and ignorant persons have been
puffed up through vanity to show their extraordinary
benevolence, and have lent their names without any in-
terest in the society. Some persons have been induced
to lend their names without taking shares or insuring,
because they have been allowed a fee for their attendance
as directors. This class are perfectly contemptible ani
degraded, and but for the mischief they may do, are not
worthy of consideration. Another class insure for a
small amount, and receive in fees more than their pre-
miums—a class of decoy duck. It appears evident that
something may be done to protect the young men of Man-
chester from the dangers which threaten them ; as it is
to be observed that these recklesss offices pay agents,
exorbitant commissions, and high salaries, which the
business cannot afford. One mode of protection is,
to inquire at the local boards if their names are
used with their own consent ; to ask whether they are
shareholders and liable in any degree for the policies,
or whether they are liable for 201. or 1001. paid up by
shares ; and, further, to know whether the local board
dare trust their own office so far as to ensure their own
lives in it. I bring the matter before you for your con-
sideration. If you can do anything to avert evil, do it.
At any rate, the fact of its being laid before you will
probably neutralize much mischief. I may further add,
that although the above remarks refer more particularly
to offices registering under 7 and 8 Vict., cap. 110, there
are offices established prior to that act in England, and
also Scotch offices, whose rates of premium are so ruin-
ously low that by-and-bye they will be found out and
ruin follow. Cheapness in life assurance is not always
an advantage.—l remain, my dear sir, yours very faith
fully, " J. Y. CAW.
" Thomas Bazley, Esq., President of the Chamber
of Commerce, Manchester."

" Chamber of Commerce and Manufactures,
Manchester, December 9, 1852.
" Dear sir,—l regret the delay which has intervened
n replying to your letter of the 23d of September last,
n which you call upon the directors of this chamber to
use their influence towards averting from the young men
of Manchester the dangers which you foresee to impend
over them from the position into which the business of
life assurance in this country has recently fallen.
" When your communication was first brought before
the board, the pure philanthropy and honourable mo-
tives which prompted it, were duly appreciated, but
some hesitation was felt as to how far the subject fell
within the province of this chamber. Mature conside-
ration has, however, convinced the directors that your
apprehension of dangers is well founded, and that they
cannot be wrong in endeavouring to direct the attention
of-their fellow-citizens to a careful consideration of so
momentous a question. I am, therefore, to state, as
briefly as I can, the grounds upon which this board ven-
tures to ;raise a warning voice, and to exhort all, and
especially the young men of Manchester, to exercise the
utmost caution in a matter which involves the future
weal or woe of the objects of their tenderest affections.
The board agrees with you entirely, that life assurance,
conducted upon prudent principles, is of immense advan-
tage to the community. If it be not prudently conduct-
ed, if it fall into the hands of imprudent men, or of
reckless adventurers (of which examples have not been
wanting), it may become in the one case a source of
misery, in the other, of heartless robbery.
In the first place it will be useful to consider what is
the nature of a life assurance.
It is a contraet between two
_parties—one of which
engages to provide a given sum on the death of the insurer,
the other to make given payments until that event
occur ; but, unlike every other species of contracts,
neither party is desirous of an early termination. The
risks, however, may not be equal. The assured must
make his yearly payments, he parts annually with
the stipulated capital,• and has no control over the
manner in which it is to be managed ; he is bound
for life, and even should he subsequently have cause
for . suspicion, he cannot recede without severe loss.
The obligation of the assuring office is so to manage
the funds entrusted to it, that, on the determination of
the contract, it shall be prepared to fulfil all its engage-
ments. The very first consideration for a person about
to assure his life should therefore be to connect himself
with such institutions only as shall give the strongest
hope of eventually performing the promises they have
held out. The board believes that many such exist,
which, by careful management, the length of time during
which their operations have continued, the amount of
realised capital, and the fortunate circumstances which
attended their infancy and growth, have placed them-
selves in a position to deserve unlimited confidence. But
the directors have seen, with deep regret, in the promises
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fore desire to throw out some suggestions which they
think may be serviceable to the young community around
them.* The scheme of life assurance is supported solely
on the hypothesis that the contributions of the members
taken year by year and invested in some fund which will
produce an interest thereon, will be sufficient, of them-
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Iseveral considerations, the most important of which
are—

1. That the probable average duration of life shall
have been correctly estimated, but especially that it
shall not have been over-rated.
2. That the full rate of interest assumed by the society
in its calculations shall be actually realised.
3. That a surplus shall be annually created at least suf-
ficient to discharge all the expenses of management.
4. That an equal or nearly equal degree of risk be
distributed over all the lives.
5. That the funds of the society shall be invested in
such securities as will not fail to reproduce them un-
diminished in value when required for the necessities of
the institution.
On the first of these considerations depends the rates
which each office shall assume. The board would not
presume to give any opinion whatever upon the proper
rates to be charged ; but it has seen a constant tendency
in the recently-established offices not only to make great
reductions from the rates charged by the older societies,
but, at the same time, to promise much greater advan-
tages. These allurements are sought to be justified by
the assertion that the rates of the old offices have been
excessive, and that the average duration of life has in-
creased. The board will not deny either of these pro-
positions to some extent ; but it does not hetitate to ex-
press a very strong fear that the reasons so assigned are
pushed beyond the reality in both cases, and that a reck-
less competition, if no worse motive, has given birth to
some delusive and most dangerous associations. The rates
of payment are certainly an important element in a con-
tract for life assurance, but they sink into comparative in-
significance when ultimate security is taken into account.
The solidity of an assurance society cannot be tested in its

* Extract from a very valuable pamphlet, entitled " Life
Assurance, its Schemes, its Difficulties, and its Abuses,"
published 1852, by W. S. D. Pateman, price ls., which the
board would recommend to the perusal of all who wish to
assure their lives.