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Annals of the Scottish Widows Fund Life Assurance Society
Chapter II

Multa fidem promissa levant, ubi plenius aequo
Laudat venales qui volt extrudere merces. [1]

1 He who overpraises the goods he wishes to dispose of; shakes our confidence by his lavish promises.—Horace, Ep. ii. 2. 10.

He sinks in credit who attempts to raise
His venal wares with over-rating praise,
To put them off his hands. Francis's Translation.

So wrote Horace, and a later cynic pronounced promises to be like pie-crust--made to be broken. But there are promises and promises, and an Institution which has made upwards of one hundred and forty-six thousand promises and has never failed in fulfilling any one of them, may be held entitled to the confidence of its members and the public.

Such is the record of the SCOTTISH WIDOWS' FUND LIFE ASSURANCE SOCIETY, the oldest life
office in Scotland. [The Hercules Fire Office undertook life assurance in Edinburgh in 5809, but gave it up after a very brief experience. In a publication by the Edinburgh Life Assurance Company in 1908 it is claimed for that honourable corporation that it is "the oldest office transacting life assurance, endowment and annuity business alone—without fire, marine or other risks —which affords the additional security of a substantial capital (£500,000)." It is to be noted that, while this is quite consistent with the fact that the Scottish Widows' Fund is the oldest life office in Scotland, a dividend has to be paid to shareholders in the above capital of half a million sterling, whereas in the Scottish Widows' Fund—a purely mutual society—there are no shareholders and the whole profits are divided among policy-holders, whose security rests, not on shareholders' property, but on their own invested funds of £21,000,000,] which, since its foundation one hundred years ago has issued upwards of 146,000 policies of assurance, and has met every obligation arising therefrom.

A good deal of wisdom is sometimes compressed into pithy saws. "Gang forward!" is a gallant motto, long since adopted by the Stirlings of Keir; but "Gang warily!" is a wiser one, appropriated by the Drummonds; and it was in that spirit that Scottish men of business acted in the matter of life assurance. During the closing years of the eighteenth century, when assurance companies were rising like mushrooms in London, and, with few exceptions, perishing as quickly, our Scottish forebears were quietly biding their time, accumulating knowledge from the experience of their more venturesome fellow-subjects in the south.

It did not, however, escape the observation of certain shrewd minds that the agents of English assurance companies on a proprietary basis had become pretty busy in Scotland and were securing a considerable amount of business. The attempt in 1809 of the Hercules Society to undertake life assurance in Edinburgh, and its failure, were not conclusive as to the possibility of establishing in Scotland an institution similar to the Equitable, whereof the soundness and success could not fail to be recognised [The Equitable Society was established under the name of the Society for Equitable Assurances on Lives and Survivorships. Although it was the first office to graduate premiums according to the age of insurers, for very many years after it began business it took lives without medical examination or certificate. Candidates for assurance appeared before the Board, who questioned them "as men of the world" ; and the success of the Society was proof that this method was satisfactory.] for the Hercules was a proprietary concern, and, when it abandoned its essay in life assurance, continued to conduct its fire business in a manner profitable both to shareholders and clients.

The credit of initiating a movement for the establishment of a Scottish society was due to Mr. David Wardlaw, writer, of Gogar Mount, who, in co-operation with Mr. Patrick Cockburn, drew up a prospectus and "Plan of the Regulations" in 1811. This was submitted on 25th March 1812 to a small gathering of gentlemen who had been induced to take an interest in the proposal, in the Royal Exchange, Edinburgh.

Mr. John Francis Erskine of Mar was called on to preside, and the following gentlemen were nominated a Committee "to make such enquiries and investigations as they shall find necessary for enabling them to report to an adjourned meeting such regulations and tables as they shall think proper to be adopted in commencing the Institution "

This Committee held meetings on 6th and 21st April ; and on the latter day, having obtained the opinion of the Solicitor-General and Mr. Cathcart that the articles of a draft prospectus which was before them would be "sufficient to exclude any risque of general liability of members of the Society," they drew up an amended prospectus, directing that it should be printed and circulated among "all the principal towns and populous districts in the country and to all the clergymen in Scotland, both of the Establishment and Secessions."

The prospectus was prefaced by the following statement, setting forth the object and scope of the proposed Society.

The beneficial effects of the establishment for making provision to Widows of the Clergy of the Church of Scotland have been long felt and acknowledged, and have given rise to similar institutions, which have also been attended with the most salutary consequences; but all these being confined to particular districts, societies, and corporations, it has occurred to some gentlemen in Edinburgh to propose the formation of a General Society, with similar, but more enlarged, views, the benefit of which may be extended to all parts of the United Kingdom.

This proposition being highly approved of, and patronised by some of the most eminent characters, the following plan has been prepared, and is now humbly submitted to the consideration of the Public.

It is unnecessary to dwell on the general advantage of institutions which are calculated, by a small annual sacrifice when persons are best able to spare it, to rescue from probable want and dependence those beings whose permanent comfort every good man feels it to be one of the first objects of his existence to secure.

Those who are unable to set apart such a portion of their incomes as will afford, after their deaths, suitable annuities to their widows or other dependent relations, have the satisfaction, by joining such institutions, to feel that this great object is attained; while the rich are saved the necessity of laying aside and securing capitals for jointures or annuities, and enabled to leave them their estates in so far clear and unembarrassed with what so frequently happens—a tedious, troublesome, and expensive trust-management.

The principle of the proposed Institution is to take from contributors no more than what, according to the most approved calculations, is sufficient, by careful accumulation of the funds, to afford the annuities contracted for, excluding any idea of proprietorship or advantage to particular individuals; and it will be a fundamental rule that the whole business of the Society shall be managed by persons deriving their appointments from the free choice of the Members themselves.

Among the rules drawn up by the Committee a few points which are of interest at this day may be recapitulated.

Under Rule II. it is provided "that the Association shall comprehend ALL RANKS." Unmarried men might nominate at their admission "sisters or other females, who shall be considered on the same footing as wives in respect to this establishment."

Profane persons might construe the privilege thus offered to bachelors in regard to "other females on the same footing as wives" in a sense very different from that contemplated by the reverend chairman and the serious citizens composing his committee; but—Honi soit qui mal y pense!

Rule III. sets forth that "any Member may secure annuities to different Females, not exceeding, in whole, £500 a year on the life of one Member, beyond which it is not proposed at present to go."

Rule IV.—No person to be admitted a Member who is above sixty years of age, or whose wife is more than twenty years younger than' himself. Presumably this limitation was intended to apply also to the "different Females" provided for under Rule III.; anyhow the Directors took power, "in all cases, to refuse applications of proposed Members without assigning reasons." This was made all the easier by Rule V., which laid down that Members were to be admitted by the Directors voting by ballot, one blackball in three excluding a candidate.

Rule VII.-"The Widows of persons committing suicide, falling by the hand of justice, or dying on the seas (except in His Majesty's packets passing between Great Britain and Ireland) shall only be entitled to annuities corresponding to the value of the interest of their husbands at the time of their deaths."

Surrender values were provided for under Rule XXII., which empowered the Directors, "for behoof of the Society, to buy up the interest of any of the Members wishing to dispose of the same, in whole or in part"; and under Rule XXVIII. it was ordained that "if, in process of time, it shall appear that the Society shall have acquired a capital more than sufficient to uphold its credit, as well as to satisfy all claims that may come against it, the Members shall participate of the benefits thereof in proportion to their interests in the fund."

It will be noted that these rules were drawn up so as to provide for annuity business only; but in a note appended to them it was stated that it was in contemplation so to frame the Articles of Constitution as to extend the scheme to include endowment and the payment of capital sums on the death of members. "But," continues the note, "as it is not thought expedient to commence with all these branches at once, the execution of that for insuring capital sums will be postponed, or limited to small sums for a certain time, with power to the Directors to defer it for a longer time, if they shall think proper."

Specimen tables, drawn up by Mr. Patrick Cockburn, accountant, and founded on the Northampton tables of probability, were submitted through Lord Primrose to Mr. Morgan, actuary of the Equitable Society, for revision, to be circulated with the prospectus.

The note contained an invitation to the public to consider the proposed scheme, and communicate any observations thereon to Messrs. Gibson, Christie, and Wardlaw, or Mr. William Wotherspoon, and concluded with the reminder (prudent in days when postage fees were heavy and had to be defrayed by the addressee) "Letters on this business are expected to be post paid."

Hitherto all existing assurance offices had based their calculations on the Northampton tables of mortality, reckoning. interest at 3 per cent. Mr. Patrick Cockburn, however, to whom was entrusted the task of framing annuity tables for the nascent Society, while adopting the Northampton tables, calculated the value of money at 4 per cent and added a fractional sum to the price of annuities to meet the expenses of management.

Moderate as was the language of the prospectus, and modest the scope of the undertaking described therein, there was something to inspire awe in the list of "eminent characters" whose countenance the Committee secured and whose support they hoped for. Indeed the names associated with the enterprise and circulated with the prospectus were so numerous and so august as might have suggested some risk of overcrowding the quarter-deck of the craft about to be launched.

annuities to persons to commence in the middle or later periods of life, and for assuring capital sums payable at the death of the members, tables of premiums for these different kinds of assurance had also been calculated by Mr. Cockburn and circulated alongst [sic] with the prospectus, in order that the opinion of the public might be obtained with regard to the propriety of this measure." Thereupon the Committee instructed Messrs. Gibson, Christie, and Wardlaw to frame the Articles of Constitution so as to embrace these objects.

The preliminary expenses, including printing, postage, etc., now claimed attention ; and it was resolved that a subscription list should be circulated among the patrons, proposed directors, and other friends of the Institution, the sums subscribed to be repaid on the tontine principle at the first or second decennial investigation, should the Society find itself with a sufficient balance at its credit.

The next step was for Messrs. Wardlaw, Cockburn, and Wotherspoon, the chief promoters of the enterprise, to go to London for the purpose of consulting Mr. Morgan of the Equitable, whose good offices had been secured through Lord Rosebery. [Appears in the pro' pectusas President under the title of Lord Primrose. He succeeded as 4th Earl of Rosebery on 25th March 1814.] They started on their journey early in 1813—a journey, be it remembered, under very different conditions from the luxurious transit to which the present generation are accustomed. John Loudon Macadam had not yet exercised his magic on the North Road; none but heavy stage coaches could travel on that unmetalled highway, and even if the deputation travelled by post-chaise, the journey from Edinburgh to London occupied four or five days. However, it proved well worth the time and expense; Mr. Morgan put his unrivalled experience freely at the disposal of the travellers, certified Mr. Cockburn's tables as sound, and carefully revised the draft articles of constitution.

More than a year passed before the Committee met again. The truth is that, despite the imposing array of patrons and officials, honorary and executive, whose names had been published with the prospectus, the Scottish public had showed no signs of being enamoured of the scheme; so that at a general meeting of "the friends of the proposed Institution, to be called the Scottish [sic] Widows' Fund and Life Assurance Society," held in the Royal Exchange on 6th July 1814, the Committee had to report that they had been able to raise no more than £248 : 17s. 10d defray preliminary expenses, which was quite inadequate for the purpose. [Further subscriptions raised the amount to £375 : 18s., which was repaid to the subscribers at the first investigation in 1825.] This discouraging circumstance notwithstanding, the meeting (number present not recorded) unanimously resolved to go forward, and an

Dr. Johnston having been called to the chair, it was in keeping with the spirit alike of the age, of the nation, and of a city whose pious motto is Nisi Dominus frustra, that he opened the proceedings with prayer. The first resolution submitted was passed unanimously, declaring that the Society was now formed and that the directors were ready to undertake their duties. At a subsequent ordinary meeting of directors held on 6th March 1815 it was resolved that, in order to prevent any disputes that may afterwards arise as to the period of the commencement of the Society, according to which the periods of investigation will be afterwards regulated," a standing order should be enacted that the Society commenced on the 2nd day of January 18 15 (the 1st January being a Sunday), and that the first period of investigation and distribution of surplus should be on 1st January 1825 or the first lawful day thereafter.

This resolution having been confirmed by an Extraordinary Court on the ist May following, it may be argued that the 2nd January is the right anniversary of the Society ; but, although it is within the power of an Extraordinary Court to rescind one of its own resolutions, it cannot annul a fact;

Not Jove himself upon the past hath power;

wherefore the true historic natal day of the Scottish Widows' Fund Life Assurance Society must be held to be 29th July 1814, although for administrative purposes the anniversary falls on ist January. August analogy to this duplicate observance may be found in the official date of the Sovereign's birthday, which does not always coincide with the day of his birth.

It was also at this Extraordinary Court of 29th July 1814 that Mr. Wotherspoon is first mentioned in the minutes as Manager. He was called on to find security for the sum of £500.

On 19th September 1814 Mr. Wardlaw applied for a policy of assurance for £1000 payable at his death, Mr. Cockburn for a similar one of £500, and the proposals of these gentle-men were accepted on ioth October following. A number of other policies were issued before the close of the year, whence it is evident that the Society was in active existence for five months before its official birthday.

Mr. Morgan of the Equitable Society, having considered the proposed tables afresh, wrote on 20th September expressing the opinion that single premium payments, endowment assurances, and deferred annuities would not be much in request. "The less of this business you have the better, for if you gain money on one kind of assurance in consequence of the probabilities of life being higher than the Tables make them, you must lose in proportion by those assurances which are advantageous only in proportion as the probabilities are lower than the Tables make them."

Before receiving Mr. Morgan's letter the directors had resolved that io per cent be added to the contributions of persons subject to gout. The Equitable charged ii per cent extra for gout, and the same for not having had smallpox. "Gang warily" still continued to be the axiom of the directors, and on 31st October they determined that, until the funds of the Society should amount to £3000, in the case of any assurance over £500 being effected upon a life, the amount in excess of that sum should not be exigible until five years after the date of the policy, the balance unpaid carrying interest. On 19th December it was resolved that "in the infant state of the Society it should avoid any risque of more than common hazard," but recommended that efforts be made to obtain such data as would enable them to assure persons going outside Europe, and military and naval men, on terms proportionate to the extra risk.

Although the Scottish Society was avowedly framed on the lines of the Equitable, there was a certain divergence between the immediate aims of the two institutions ; for whereas the Equitable dealt primarily and almost exclusively with life assurance pure and simple, the dominant purpose of the founders of the Scottish Society was to raise a fund securing annuities to the widows of its members. Life assurance only came to be contemplated as a subsidiary supplement to what was intended to be the main business, and this was clearly indicated in the title "Scottish Widows' Fund and Life Assurance Society"; but it very soon became apparent that the annuity branch of the concern was to be far outstripped by the assurance of capital sums on lives. Yet the old name, shortened colloquially into "Scottish Widows," still remains unchanged —long may it so continue! though one may smile sometimes when some Englishman, who has neither perpetrated, nor doth contemplate, matrimony, speculates vaguely on the relevance of the title ; just as one may hear uninstructed comment upon the name British Linen Bank, an institution which assuredly has nothing flimsy in its constitution.

It probably cost the founders of the Scottish Society many an anxious thought when they saw the bulk of their business flowing from the first into that channel which they had designed as the less important of the two. They had adopted as a cardinal principle the mutual system which the Equitable Society had carried to such signal success, and they had calculated on being able to accumulate a fund by the sale of annuities. But it soon became evident that they would have to rely chiefly upon annual premiums on life assurance for building up that fund—a slow process which might be swamped by the emergence of a heavy claim or claims before there was enough money at the Society's credit to meet the same. It was doubtful whether the banks would allow an overdraft upon the accounts which had been opened; for, as a mutual institution whereof each member was liable for no more than his covenanted contribution, they had no share capital—no guarantee from a body of proprietors such as the managers of a proprietary office might fall back on. Howbeit, fortune smiled upon the enterprise ; no claim for a capital payment emerged until the Society had been doing business for eighteen months, and the critical early months were passed in safety.


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