The times. [volume] (Richmond, Va.) 1890-1903, 1897-11-14
AcIIr nE NInNEY.

GIIIt OF MONf1.
An event Of interest TO the insurance
world is the announcement recently made
by the Mutual Life. the New York Life
and the Equitable Insurance Companies Of
New York. OF a reduction Of the in
terest assumption" from 4 to 3I2 per
cent.
In order 10 understand this new de-
parture, II should be explained that what
are called the level premium companies
are required TO provide from their pre-
MUM receipts a reserve which must be
held by them until needed to meet the
increased mortality rate which naturally
comes with the increased age Of the busi-
ness. This reserve is invested in the mean
time and the amount which Il is ne
cessary TO put into the reserve fund
depends upon the rate OF interest at
which It is assumed that it will ac-
cumulate while the fund is so held.
The policies issued may run for a pc
Rod Of seventy years. and the assump-
ton Of interest 10 be earned during such
a long period must necessarily be made
with great care and with due regard TO
contingencies that may arise, the COM
panys solyency depending in part upon
realizing the rate Of interest assumed
The New York companies have readjusted
their rate under new law in New York,
which permits it.
This statement is interesting. we say.
to tho insurance world. but the reason
why this departure has been made s. in
teresting to everybody. The companies
state that it has been found necessary
TO reduce the assumed rate, because the
actual rate Of interest at which their funds
can be loaned has also been reduced
In other words the cheapening Of money
Is the great factor in this departure
There IS a elut Of money and with a
large supply. necessarily the rate Of in
terest, has been reduced, because with
sharp competition between those who
have money TO lend. the price naturally
and inevitably Is lowered Secretary Gage
has recently recommended that the Gov
eminent issue bonds bearing ID per
cent. interest 10 retire outstanding bonds
and he and others believe that these
bonds could be readily sold at par
Is there not in this food for reflection
for those who contend that the trouble
with this country is a great scarcity
Of money The rate Of interest, which
is the price Of money loaned, is regu-
lated by the law OF supply and demand
When money IS scarce, the rate OF I'M
terest will be high. and when money
is plentiful the rate Of interest will be
low. The converse Of that proposition is
also true. When interest is high, money
is scarce. and when interest is low,
money is plentiful.
We showed the other day that the
amount OF gold in circulation in this
country is greater than was ever known,
and it Is also true that the amount OF
money OF all sorts in circulation ON
November LIST reached the enormous
figures Of one and three-fourths billion
dollars, which was also a high water
mark record.
with these facts and figures before
them. with the greatest amount Of money
in circulation this country ever knew
with per capita circulation Of $3.50.
with three great insurance companies
lowering their assumed rate OF interest,
because the actual rate OF interest has
been lowered, it cannot properly be
claimed that there IS any lack Of money
In this country.
Our contention is that there is an
abundance Of money, but that it is badly
distributed, and tends to concentrate
in certain centres under the operation Of
the national bank law. With the 10 per
cent. tax on State bank issues repealed.
small banks would spring up over the
country and an ample currency would be
supplied which would remove all the
cause Of just complaint. which now GER
tainly exists.