Daily Kennebec journal., 1899-03-14

declining. What would have been re-
garded as only fair return on an in
vestment. not SO many years ago.
would now be regarded as extraor-
binary. and only toS be expected from
some investment of a more hazardous
nature than conservative men would
touch. Where will this decline in in
terest stopet What will be the interest
rate of the future? These problems
are of vital concern. not only to the
great financiers of the land, but also
to every person who has few dollars
saved against the proverbial rainy
day.
Since life insurance contracts run
many years into the future the prob
Importance to the men in charge of the
billions of dollars which stand behind
the 100000 900 life insurance policies
estimated to be outstanding. The in
vestment Of this vast reserve fund in
terests the policyholder as well as the
companies, for the premiums are high
err or lower according to the rate Of in
terest procurable on investments, pres
ent and future. 1t was to ascertain
this factor of computation that James
w. Alexander, vice president of the
Equitable Life Assurance Society OF
the United States, recently sent to the
leading financers of the country let
ter asking. What rate of interest do
you consider it safe for life insur-
ance company to count upon realizing.
on its total assets, invested in such
securities and mortgages as an institu-
ton of this kind should hold during
the next 20 years?"
This inquiry elected responses from
sources so eminent. and in number so
remarkable, that Mr.. Alexander has
published them in a neat pamphlet for
the benefit Of similar inquirers and the
public. They include opinions from
the secretary of the treasury, the as
sistant treasurer of the United States
at New York, presidents of the leading
banks. trust companies, savings banks
and exchanges, both in this city and
throughout the country, prominent
Wall street financiers. railroad presi-
dents. merchants, lawyers and politi
cal economists.
But, various and widely separated as
were the interests consulted. the opin-
ions come so close to unanimity that
the result may be called consensus.
Three per cent. may be said to be the
average maximum rate which these
distinguished financiers believe can be
realized, beyond all peradventure, upon
the funds of life insurance companies
during the first two decades of the Goth
century. A few place two and one
half per cent. as minimum. and some
suggest three and one-half per cent.
as the maximum, but with almost sur
prising agreement, three per cent. is
the rate upon which it is believed the
companies may safely base their call
cula tons for the future.
1t must be remembered that corpora
tions guarding trust funds, such as life
insurance companies, are restricted by
law to certain enumerated classes Of
investments, the absolute security Of
which is supposed to compensate for
lower rate of interest than might be
secured, though with greater risk, in
investments more speculative in char
acter Then, too, as some of Mr.. Alex
ander's correspondents suggest, the
present downward tendency of the safe
interest rate may be arrested in the
near future by the expanding re-
sources Of our own country, the great
fields for investment opening up in the
West Indies, in Hawaii and the far
East, and the utilization of unem-
ployed capital in developing these re-
sources. But such considerations are
purely conjectural. just as is the opin-
ion of one writer that abnormal con-
ditions may send the safe rate down to
two per cent.