The Democratic press. [volume] (Ravenna, O. [Ohio]) 1868-1901, 1890-08-13
sAvnNNA. wEDNEsDAY. Aug. s,1sso
Assessment Insurance.

ince, relative to the numerous compa.
lies or concerns that, under the allur. :,
ng promises of "small investments :
md large returns" have been opera !
ing in our city so extensively of late,
hat the evils resulting from the many f
PROMISES made by such organizations, {
we're great, and should be combatted {
+
1t is a fact, that our Legislators {
strive to protect the country from the
pernicious workings of lottery schemes
where there is probable chance that
few, at least, will realize from their
investment), but the excessive work.
lngs of such concerns as the ones
above alluded to, where no one can le.
expect to have the promises
fulfilled, are tolerated, and even en-
couraged, by the laws of the land,
Hereto is appended extracts from
the last Annual Report of the Com.
missioner of Insurance of the State of |
Massachusetts,, which have the ring of
the true metal:
The growth of the Mushroom Endowment
Corporations, with their extravagant promises
has brought the fraternal associations
practically to a standstill, and they will but
slowly recover from the blow dealt them in the
wild cat furry of the past eighteen months.
The beginning of the end is in sight; the spec
ulative tide which swept over the common
wealth in fantastic flood during the past year
and there have been organized to the present
time forty-six corporations. promising upon
the contribution of q comparatively insignif-
can't amount in assessments. the payment at
the end of a term varying from one to ten years,
of large endowment. Nine of these had done
little business up to the close of last year; sew
enteen are the growth of the present year; the
remaining twenty. with two foreign companies
of like character, whose operations were legal
lied by the statute, had at the close -oc-Rec,,
1879. an aggresate membership of 80, PAS. with
q total liability upon their certificates of $780,
634540. The total cash assets at that date of the
twenty home companies amounted to $59,s1s
and the reserye funds aggregate S29 ,64s Six
Of the corporations. however. have a net in
debtedness of So. .4s6, leaving a net reserve fund
for the entire twenty corporations of $2S,2 or
an average of 81 for each then existing mem
ber towards the realization of the 500. or $500,
or 81 900. as promised. No sooner had the Leg
islature convened than the promoters of these
schemes came with petitions to be permitted to
assess and hold an unlimited reserve fund.
openly confessing the utter impossibility of
carrying their plans to asuccessful completion.
&C. The average age OF these twenty corpora
tions was less than six months when this plea
of inability to live under the law was entered.
How the promises Of these corporations are to
be realized. no one of their promoters has un-
kau ma y In
this is purely a question of finances; of the
proportion of assets, present and prospective.
the liabilities, the plan, if one existed, would
seem to be easily capable of explanation. But
nowhere in the literature of these corporations
has this been attempted; paragraphs are pub
lished, claiming that because some other Asso-
citation, organized on an entirely different basis
to meet death claims only, has succeeded in
meeting its liabilities at a certain cost, there
fore endowments can surely be paid to all living
members at comparatively moderate expense.
But there is contempt and scorn for the multi
plication table, or any of the known rules
which have heretofore made financial transac-
tions easy of computation. Unless the mana
gers Of these corporations have finally acquired
the long sought for power of alchemy. or dis
covered some wizards art unknown to business
transactions in all the worlds history, they
will require just one hundred cents. to make
good each dollar promised in their certificates.
For what other method of payment than by
actual assessment, do they possess? First, the
transfer Of the fund for persisting m members ol
amounts paid by those who, remaining a short
time. fall out by the way and forfeit the amount
they have paid. Second, the financial power
of continual multiplication of membership
AS to the first: Massachusetts. thirty year:
ago. by statute declared the principle vicious
and made it unlawful in all plans of regular
life insurance; the commonwealth said that the
accretions from lapses should not be confscated
to those more fortunate ones, who were able tc
keep up their payments. and that in all Massa-
chusetts, level premium life Insurance compa-
nies, should policy holder lapse in payments
practically the amount he had contributed be-
yond the actual insurance and expense cost
should inure to the benefit of the contributor
and not be diverted to the pockets of others
That the statute has legalized the reverse o.
this practice does not in the least affect its mo
rnlity and honesty. The statistics that can bt
CLEANED from the brief history of the older o.
these corporations, show how deiusive is ever
this prospect for large reserve accumulatiens
the members who drop out dc so almost alto
gether in the early months of their membership
when they have made but limited payments
are pretty certain to hold on till the end, il
hope of reaping the large bonus promised
The second means, the multiplication of mem
bership, is simply sort of perpetual motion
myth; true. if but q small number should joir
one of these organizations during the first veal
and the membership should be thereafter swol
len sU as to aggregate at the beginning of thu
first year of payment thirty or fifty times tht
number whose certificates mature, payment tt
these could easily be made. but only by the us'
of funds contributed by these later mem ber
towards their own certificate payment. How
long can this repeating process go on9 There
must at some time be an end to the many fol6
increase absolutely demanded by this sort o.
progressive game. in which the faster the pres
ent aggregation, the more speedy the culmina-
ton. What sort of morals or honesty is in
volved in this phase of the payment problem
The plans of these corporations certainly ot
not lack variety; the larger number promise
81. 900 at the end of seven years; one issues Ger
tifcates for the same amount, but extends thu
period of payment to ten years; others hold ou
the offer of $500 in five years another promises
double that sum at the end of the same term
one thinks Eve years necessary in which to pay
$500, and one pledges 800 at the end of twelve
months and this upon the virtual promise o
not more than twelve assessments of two dollars
each. and with charming naivete. adding thu
statement chat whatever balance there is lef
after paying 800 endowments from Ss4 in as
sessments will be carried to the reserve fund
The name of this association, The Royal Ark, ,
was surely not chosen from the fact that. lik,
its great prototype only few will be taken in
Another has just been incubated, which lead!
the procession with scheme to 500 to eacl
certificate holder at the expiration of si1