The American Term Life Insurance History Project - Penn Mutual Life Insurance Company of Philadelph

You are reading a page from Proceedings of the 50th Anniversary of the Penn Mutual Life Insurance Company of Philadelphia (1897)
Part of the American Term Life Insurance History Project
Term Life Insurance

                      SECOND DAY.
                      MERCANTILE LIBRARY HALL,
                  PHILADELPHIA, Wednesday, May 26, 1897.
    The second day's session of the Convention opened with a full
and punctual attendance of the delegates; the assemblage equaled
in numbers that of the preceding day, and again testing the seat-
ing capacity of the commodious hall to its utmost limit.
    At 9.45 A.M. the gavel of the Presiding Officer (Mr.
Harry F. West) sounded the call to order and instantly the hum of
conversation ceased, the audience assumed a business-like attitude
and the program of the day was proceeded with.
    Chairman WEST. Gentlemen, I regret much to say that I
will be away from the proceedings this morning, but Mr. William
H. Rhawn, one of our Trustees, has kindly consented to act, in my
absence, as Chairman of this meeting. It is hardly necessary for
me to introduce Mr. Rhawn to you. You all know him, know of
his ability and of what he has done for the company. I take
great pleasure, therefore, in asking Mr. Rhawn to take my place as
Chairman.
    Mr. WILLIAM H. RHAWN, upon taking the chair, was greeted
with tumultuous applause. Upon its subsidence he spoke as fol-
lows: Gentlemen, I thank you for your kindly greeting. I feel
very much as Jacob did when he supplanted Esau. I think I
have, however, supplanted a much better Chairman than you will
have to-day, but trust that you will bear with me patiently under
the circumstances.
    I have a statement to make, this morning, that will
interest you. It is this.   During the month of May, 1847—the
first month of the business life of the company—there were thir-
teen policies taken out, to the amount of $56,000. Yesterday, on
the fiftieth anniversary of the commencement of the business life
of the company, the number of policies issued by the Penn Mutual
Life Insurance Company amounted to two hundred and five, ag-
gregating a value of $702,000. (Applause.) This number ex-
ceeded, I think I may say, the total for any previous three days.
42              SEMI-CENTENNIAL CELEBRATION
There have been more than two millions and a half taken out this
month, and I feel well assured that the total will run up to three or
four millions before the end of the month is reached.
   Yesterday I had the pleasure of presenting to you a grandson
of mine, who expects to be here at the Centennial, in 1947. That
is what he told me, yesterday morning, at breakfast.   I hope his
expectation may be realized. I want now to present to you a
gentleman who started with the company in 1847, and who is still
with it to-day—Mr. Compton. I ask that gentleman to take a
seat, for a short time, on the platform, in order that you may all
see the oldest representative that we now have here. Mr. Comp-
ton, the Chair will state, is not only an insured member dating
back to the first year of the history of the company, but he is also
one of the oldest agents of the compam\
    Mr. ALBERT G. COMPTON, of West Chester, Pa., was here
escorted to the platform by Manager Henry C. Lippincott, amid
the hearty plaudits of the Convention, and, after bowing an ac-
knowledgment of his reception, quietly took a seat to the left of the
Chairman...
    Chairman RHAWN. The first business that the Chair finds on
the program this morning is the reading of a paper upon "The
Evolution of Life Insurance," by Mr. John W. Iredell, Jr., General
Manager for Ohio, Kentucky and Tennessee.
    Mr. JOHN W. IREDELL, JR., upon being presented by the
Chair, was warmly welcomed by the Convention. He proceeded
at once with the reading of the paper prepared by him on the above
subject, the salient features of which were much applauded. The
paper was as follows:
ADDRESS BY MR. JOHN W. IREDELL, JR., "THE EVOLUTION
                   OF LIFE INSURANCE."
MR. CHAIRMAN AND GENTLEMEN:
   More than two hundred and fifty years ago the seeds of the present
science of life insurance were planted in London drinking taverns, in the
crude form of bets as to whether certain prominent characters would sur-
vive some present illness, or that a certain man, under the influence of
liquor, would reach home safely. The habit of betting, once inaugurated,
extended to all sorts of vagaries and swindling schemes, about which there
was neither experience nor any collected data on which to predicate results.
         THE PENN MUTUAL LIFE INSURANCE COMPANY.     43
But wild and visionary as those early schemes were, they suggested the
possibility ot equalizing and distributing loss.
   The law of average had begun to be investigated in the line of marine
insurance, and the sale of annuities and reversions was attracting attention
and stimulating investigation into the principles on which they rested.
The rates of births and deaths were being gathered up by statisticians, and
the foundations for scientific superstructure were being laid. But it was
not until 1698 that the first life insurance company was founded in London.
   The first company to insure lives in this country was the Presbyterian
Ministers' Fund, organized in the year 1759, in the City of Philadelphia.
In the same city, in the year 1769, the Protestant Episcopal Corporation
was founded, and the Pennsylvania Company for Insurance on Lives and
Granting Annuities was organized March 12, 1812. During the years 1843
to 1847, inclusive, there were seven mutual life insurance companies incor-
porated. At that time the business of life insurance was largely experi-
mental. It is reported that several companies divided all surplus after the
first and second years, and that the oldest company did not make any pro-
vision to create a reserve fund, to meet future contingencies, until after the
fifth year.   The application of the Penn Mutual at that time contained tour-
teen questions, and information as to ages of grandparents, parents,
brothers, and sisters, condition of health or cause of death, was not re-
quired. The medical examiner's blank contained seven questions only, and
yet the records show that the risks were first-class, and that many of the
old members are living to-day.
   The officers of a New York company issued policies on the statements
of the applicant, the family physician, and the certificate of an intimate
friend, no examination being required.
    During the year 1846 the same company issued 339 policies on the
lives of slaves. The amount of insurance was usually $500.00, for the term
of one year. Occasionally one policy covered several lives. Policy No.
799 was on the lives of three slaves, and No. 268 was issued on the lives
of ten slaves and one white man! The first death-claim paid by that com-
pany was under a slave policy for $225.00. The issue of such policies was
discontinued April 19, 1848. One of the early agents of that company was
Schuyler Colfax, late Vice-President of the United States.
    Policies were issued upon the ordinary life and short-term plans only,
and were forfeitable for non-payment of premium; no paid-up or other
values were allowed to the unfortunate members who could not pay pre-
miums when due.
   The policy contained many restrictions, one of which was that in case
"the insured shall, without the consent of this company, previously ob-
tained, and endorsed upon this policy, die upon the seas, this policy shall be
void, null and of no effect." A Cincinnati policyholder, contemplating a
visit to England, objected to that part of the contract, and when informed
44             SEMI-CENTENNIAL CELEBRATION
that the restriction as to travel had been removed, insisted upon a permit
being granted, because the policy very clearly set forth the condition that
if he should "die upon the seas without the consent of the company, it
shall be void, null and of no effect." A permit, granting permission to die
at sea, was issued by the company, and the gentleman was satisfied.
(Merriment.)
    Another company's policy did not allow the insured to reside in the
Wabash Valley, south of Springfield, 111., or west of the Mississippi River.
    In those days commissions paid to agents were ten per cent. on first
year's premiums, and five per cent. on renewals. One of the companies de-
cided to establish an agency in the City of St. Louis, but not to extend the
business beyond the city. As an inducement to write a large business, the
agent was allowed ten per cent. on first year's premiums and ten per cent.
on renewal premiums during the life of the policies. Appreciating the
value of the contract, the agent put all his energy into the work and, as
territory was extended West, he succeeded in building up a large business,
and is now receiving his ten per cent. on renewals, which affords a very
handsome income.
    After 1860, and especially after the war, many companies were organ-
ized, and competition among agents was sharp and exasperating. There
was a great contest between all-cash premium and half-cash and halt-note
premium companies. The latter companies wrote the larger business,
which forced the all-cash premium companies to increase commission to
agents, which enabled them to largely extend their business, and which
finally resulted in the abandonment of the half-cash and half-note plan of
paying premiums.
    The first endowment policy was issued in May, 1862, and the first
limited-payment life policy was issued in December, the same year. In
1869 the Tontine policy appeared: later the Semi-Tontine, life-rate endow-
ment, accumulated surplus and trust certificate policies were introduced,
and became very popular, judging from the very large amount of insurance
written on those plans. Within the last few years cash, loan and exten-
sion values have been adopted by several companies, all of which are
printed in the policies, so that every member may know what his privileges
are at any time by referring to his policy.
   The past fifty years have unfolded marvelous changes and improve-
ments in all branches of social economy, but in none are the advancements
better marked or more beneficent in their results than in the field of life
insurance.
   In this, as in all other human institutions, the elements and sources of
progress were present, experimental science pressing on to perfection,
every new endeavor, every new fact acquired, bringing the investigator
nearer to the desired end.
   On the other hand, in the advance of civilization, the desire of human

         THE PENN MUTUAL LIFE INSURANCE COMPANY.     45
beings to ameliorate unfavorable conditions, was keeping step with scien-
tists, and the co-operation of these scientific and humanitarian forces have
evolved one of the most marvelous institutions known to history.
    Crude in form, and limited in application as were the beginnings of
life insurance, the seed has fallen upon a favorable soil and has grown to a
great tree, whose spreading branches now shelter almost every home in the
land.
   The early prejudice of "tempting providence," strong and tenacious as
was the "divine order of human slavery," gave way before the accumulated
facts of history, and the force of logic by the indefatigable energy of a few
philanthropic people. (Applause.)
    The early methods, plans, rates and forms, have all yielded to the pro-
gressive march of advancing knowledge, always in the general direction of
establishing equity and mutuality among members. Unnecessary restric-
tions have been removed, and the whole contract reduced to the nearest
approach to simplicity in language, expressing equity and justice between
man and man that conscientious men can devise. Actuarial science has
worked out plans adapted to the wants and circumstances of the whole
people.
    High and low, rich and poor, the professional man and the business
man, no matter in what sphere he may move, or what his relation in society
may be, a plan has been devised to meet his wants, to conform to his cir-
cumstances, and so as to extend to every family the benefits of an institu-
tion which was orignally the privilege of a favored few.
    Has life insurance reached its full development in all directions, in all
departments? Has the future yet in store for it further modifications, a
greater expansion, a more universal application? While the sources of pro-
gress in the human heart and human brain remain unexhausted, it would
be presumptuous to predict either the extent or the direction of the future
of this science—but that there will be progress cannot be denied. Having
made liberal provision for unfortunate members compelled to lapse their
policies, what new inducements will be offered to members who continue to
pay premiums until their policies mature by death or otherwise? What
equitable proportion of the surplus, then existing, and to which they have
largely contributed, will be awarded to them. (Applause.)
    The distinguished physicians who have charge of the medical depart-
ments of their respective companies are entitled to, and have received full
credit for all they have done to advance the best interests of life insurance.
They have appointed local examiners throughout the country, many of
whom stand at the head of their profession—men of ability, experience,
and integrity, who are well <(ualified to make a thorough examination of the
applicant brought before them, and who are fully competent to decide
whether or not he is an insurable risk. Is it not possible that the time
will soon come when the Medical Board will fall in line with the officers of
46

SEMI-CENTENNIAL CELEBRATION.

the other departments in the march of progress, to the end that the great
benefits to be derived from legitimate life insurance may be more liberally
distributed among those who are recommended by the local examiners?
Many well-informed life underwriters, who have given many years and all
their time and talent to the business, believe that beneficent protection of
life insurance could be profitably distributed more freely among those
whose applications therefor are submitted to the several companies.
   On this important subject, a prominent actuary writes as follows:
   "It is to the education, character and care of those medical gentlemen,
who have the honor to be associated with us in this noble business, that
much is due, for many and great are their responsibilities attending the
duties associated therewith. The mortality tables in use are predicated on
none but healthy lives being insured; so, it is a necessity, as these tables are
now constituted, that none but healthy lives are admitted to membership.
But are not the refinements of medical examinations and the exclusion of
applicants arising therefrom, growing at such a rate as even now to ex-
clude a large class of applicants, formerly considered safely insurable, and
accepted without any hesitation, and, too, without affecting the security or
welfare of the companies themselves? The purposes and results of life
insurance are too valuable to humanity to be unnecessarily curtailed.
Should we not rather endeavor to enlarge the sphere of its usefulness, it it
can safely be done? When we consider that the experience of the life
insurance companies of this country shows that scarcely tour-fifths of the
mortality losses, permitted by the tables in use, and provided for by the
premium rates charged, are realized on the average; and that the mortality
tables themselves have been calculated so as to eliminate the advantages
arising in the first few years of the insurance from the selection of risks,
does it not seem possible to act with greater Mberality in this direction?
Life insurance is a progressive, and not a finished science, is certainly
capable of great expansion, and of providing for much that is not yet
dreamed of, and we must not forget our responsibilities under the Scrip-
tural injunction—to do good, and forget not." (Applause.)
    Chairman RHAWN. The Chair is sure that we are all greatly
indebted to Mr. Iredell for his very able paper.
    The next thing on the program is a paper by Mr. Henry C.
Lippincott, Manager of Agencies, entitled "Dividends in Mutual
Life Insurance Companies."
    Manager HENRY C. LIPPINCOTT, upon rising at his place at
the Secretary's table, was honored by a more than ordinarily signi-
ficant demonstration of kindly feeling and hearty good-will by the
delegates.
         THE PENN MUTUAL LIFE INSURANCE COMPANY.     47
ADDRESS OF MR. HENRY C. LIPPINCOTT, "DIVIDENDS IN
           MUTUAL LIFE INSURANCE COMPANIES."
MR. CHAIRMAN AND GENTLEMEN:
   A request has been made to say something on the subject of "Dividends
in Mutual Life Insurance Companies." If the undertaking carried with it the
condition of novelty or originality, then some degree of temerity might be
ascribed to one who makes the essay. ' It is conceivable, however, that
within the circle of known facts and established principles something may
be said which, it it affords no information to you, may be instructive to that
large class of agents who are on the threshold of their business, and to that
still larger class of insurants who have not acquired a knowledge of the
policies which they accept, and for which they pay with promptitude and
cheerfulness.
   As long as the business of life insurance is mainly done by mutual com-
panies, or those in which the mutual principle is applied with more or less
fidelity—the record showing that seven-tenths of the whole is carried by
them—just so long will the dividend question be the paramount question.
And the reason is obvious; it goes to the core of the thing—it discloses the
cost of insurance, and in so doing attests the fidelity and fitness of the
servants whom the policyholders have chosen to do their business. Other
questions have been answered to the satisfaction of those concerned. The
terms of the contract, as to residence, occupation, travel, habits, suicide,
surrender for value, loans thereon, non-forfeiture, incontestability—almost
every such question in which liberality may unite with justice—has been
arranged in accordance with the will of the insured; if anything is yet
needed to render conditions more liberal or to more fully adapt them to
particular cases, it is having the earnest thought of competent men. But
the dividend question, which is the cost question, the one which determines
whether price is the actual cost in mutual companies, the one which shall
settle whether managements have been assiduous to obtain for their cestui
que trusts all that a dollar of premium will buy, that question has yet to be
agitated, and through such a searching inquiry as shall disclose all the
facts, let us hope that a way may be discovered to a proper solution.   (Ap-
plause.)
    Quite recently, a gentleman, long and creditably connected with this
business, publicly expressed the opinion that life insurance should be taken
"for the protection which it affords, and not for the dividends which may
be made to the insured." With this statement there will be general agree-
ment, but if the intention was to minimize or ignore the dividend question,
hoping thus to divert attention from an object of deep concern to premium
payers, the purpose will deservedly fail.
    While the life insurance business has not yet been declared to be com-
merce, the thing that is sold by the members of a mutual corporation, and
therefore bought by each member, is, in a certain sense, a commodity; and
48

SEMI-CENTENNIAL CELEBRATION

the cost of it cannot be hidden permanently, no matter how shrewdly at-
tention is diverted to minor matters. An overcoat is bought for "pro-
tection," but a purchaser would rarely be so absorbed in the use to which
it is applied as to forget the price demanded for it.   Analogy is not en-
tirely absent. It is conceivable that a thousand or more men may each
subscribe and pay a varying number of dollars to a fund with which to buy
overcoats, of various materials and different sizes, stipulating that when
cost is definitely ascertained the balance of the fund remaining unused shall
be returned to each, in the proportion contributed by him. Does anyone
imagine that forgetfulness or indifference would restrain any considerable
number from claiming their share of the surplus, or that the sense of com-
fort derivable from the new garment would entirely banish inquiry as to its
cost? Or, if men are thus restrained, what is the character of the trustee
to whom the fund was committed, if he makes no return or a false return?
    It may be justly said that the parallel is incomplete; that the one trans-
action is ended when the overcoats are delivered, and that the conditions
permit of a full accounting and a just distribution of surplus; that in the
matter of life insurance there is a continuing contract, involving invest-
ments of more or less permanence, and presenting the possibility of contin-
gencies for which there must be provision; and that, short of a dissolu-
tion of the company each year and the formation of a new one, it would
be impossible to have a complete adjustment and a just distribution.
Probably no one will strongly dissent from these claims, but under cover
of it the refusal to render any account cannot be sustained. The adjust-
ment may be incomplete, conditions are mutable, but what word would be
applied to a trustee who, being unable to report fully as to the ultimate of
certain items in the suspense account, refused to make any report what-
ever?
    If the cost of life insurance of all kinds, at all ages, was capable of being
predetermined, if its cost could be known within the traction of a dollar,
the dividend question would disappear. Some one has said that fire in-
surance is "a magnificent system of guessing;" equally it may be said that
life insurance is a monument to the faith of the premium payer and to the
fidelity of the trustee; but the moment that cost can be predetermined that
is the instant when such a trust will end, and only the obligation of contract,
as between strangers, will obtain. Men associate themselves in mutual
organizations with the object, and, so far, with the result, of doing for
themselves, at less cost, what stock organizations agree to do for a stipu-
lated price. Incidentally, they must trust some one; but when, if ever, it
comes to be the rule that trustfulness is misplaced and that the final cost
in mutual companies equals or exceeds that in stock organizations, then the
utility and supremacy of the mutual system are gone forever.
   It is well understood that exact cost cannot be foreknown. There are
tables of mortality, but men do not die in perfect harmony with their
decrees. There are assumptions of interest, but in practice no company's
         THE PENN MUTUAL LIFE INSURANCE COMPANY.     49
experience exactly conforms thereto; there are loadings for expenses, and
sometimes the aggregate is all absorbed, usually not. So, it would seem
that of all the elements going to fix cost, not one is certain. No wonder,
then. that results are uncertain, varying from year to year. AJ1 that a
policyholder may demand is a capable, intelligent, worldlywise and honor-
able administration of the trust committed to the officers. He pays to his
company, by way of stipulated premium, a sum confessedly larger than is
needed. He has a right to expect an honest account of it; not only this,
he has a right to know that his dollars are applied, every penny of them,
to proper and just uses, in keeping with the legitimate purpose of the
partnership. It is around methods of administration that the dividend
question revolves, and must continue to revolve until finally settled right.
It is beyond the power of any management to absolutely control the three
factors which fix cost. Upon two of them but little influence can be ex-
erted. A wise caution in the selection of risks may temporarily, and per-
haps permanently, to a degree, reduce mortality; scrupulous honesty, sup-
plemented by the highest financial acumen, may slightly affect the average
rate of interest received. In neither can much be done to vary or to escape
the conditions by which they are surrounded. In the control of one factor,
however, the management, with a single exception, is supreme. It cannot
determine what it may be required to pay for taxes—what fines upon
thrift State or municipality may exact—but in all else its power in controll-
ing expenses is absolute.
    Where the power resides there also is the responsibility. Given a man-
agement with the power to say whether one shall pay $100 this year or $85,
it is incumbent to fix the smaller sum if, all things considered, the true and
lasting interest of all the policyholders is subserved thereby. And just here
policyholders are to a degree forced to rely upon the judgment and dis-
cretion of the management; but this reliance need not be, and should not
be, a blind confidence. The judgment and discretion of a management are
to be weighed by its acts, and it anywhere it is found that the acts them-
selves are immoral, invasive of the rights of policyholders, even in the
slightest degree, then there is abundant justification for criticism and for
such measures as will lead to reformation. (Applause.)
    There must, however, at the very outset of such an investigation, be
ascertained what the rights of policyholders are, tor, until this is definitely
settled, there can be no method by which to decide how far there has been
an invasion of right or a perversion of trust. Ever-since life insurance in
reserve-maintaining companies began there have been two classes, holding
directly opposite opinions, and to a degree governing their actions by such
opinions; and in nothing is there such a pronounced variance as upon the
question of ownership of reserve and the extent of the interest in surplus
to which they are entitled. On the one side, we have those who contend
that membership in a mutual organization means a surrender of individual
      4
50              SEMI-CENTENNIAL CELEBRATION
interest, a merging, so to speak, of the individual right with the congre-
gate right, and, as a consequence, that the individual withdrawing, either
by death or lapse, or by surrender, must accept such expression of his in-
terest in reserve and in surplus, or dividends, as the collectivity awards. It
appears to be reasonable that no member of a mutual organization shall be
permitted to withdraw at any time or in any way so as to impose a loss
upon his late associates, or intermediately to have awarded him surplus to
an amount which may inflict a similar injury. On the other hand, there
are those, probably a majority, who hold to the idea of individuality of
interest, and contend that each member of a mutual organization is entitled
to withdraw at any time, taking with him his contributions to the general
funds in excess of the cost of his insurance to that date, provided he in-
flict no injury in so doing.   This view has been largely recognized by the
voluntary action of several companies and by legislation in various States.
Some companies, at the end of a stipulated period, permit a withdrawal of
the entire reserve; and in some States the withdrawal value closely approxi-
mates the full reserve. These conflicting opinions are difficult to har-
monize, and where held in good faith, and the general management is in
accordance therewith, no exception ought to be taken to either until it is
clearly demonstrated that the one or the other is the just one.
    Until, however, this primal question is settled, there can be no hard
and fast rule by which to weigh the acts of the trustees, who are the officers
of the various mutual companies. Those who hold to the first opinion
cannot be expected to apportion surplus under all conditions and circum-
stances with the same degree of generosity, so to speak, as would be in-
cumbent upon those who hold to the second opinion. There, therefore,
will be in companies charging the same premium for a given amount of
insurance a disparity in the amount of dividends annually returned to
policyholders, or in the amounts which may be apportioned to them tor
purposes of accumulation—and this entirely independent of the main causes
which control dividends. So, also, a retiring member's share in the aggre-
gate surplus of a company will be controlled by the difference of opinions
named.
    There has, however, grown up in the last fifteen years a practice which,
to one who is a believer in the individual right of each member of a com-
pany to all the surplus derived from his contributions, ought not to be
tolerated for a moment. Reference is made to the expenses incident to the
procurement of new business. They seem extravagant and wholly repre-
hensible. The opinion is held that no man should be permitted to enter
a mutual life insurance company who does not pay his way from the start,
any more than a man would be admitted to a club at the expense of his
associates.
    This is not the general view, of course, for the practice of many com-
panies, and all the larger ones, is directly to the contrary. There is scarcely
          THE PENN MUTUAL LIFE INSURANCE COMPANY.     51
a pretense that a new member pays his way from the start. The legiti-
mate provision tor expense incorporated 'in the premium is wholly inade-
quate for the first year, with the result that the sum necessary to make good
the deficiency must be taken from the funds of others, and it is so taken.
It is alleged that this is merely a system of borrowing, the old members
contributing from their funds and making the advances needed, so that
they may have the benefit of recent selection through an influx of new
lives, which is claimed to materially reduce the mortality of the mass, and
so compensate the older ones tor the present use of their funds. This is a
partial justification, if true, assuming that the old policyholders know the-
situation and assent thereto. For a brief period, when the expenses of the
companies now in mind were relatively much less.than now, there were
indications that this theory was partially true, at least, and that injury was
not inflicted on the old members; but the results of the last few years now
wholly deny and disprove this contention. No one may look upon the in-
creasing cost of insurance in some institutions—due in part to other causes,
but chiefly ascribable to the expense item—without noting that the pre-
dicted vitality gains are absent, or, if existing to a moderate degree, they
do not set off and compensate for the tremendous cost of new business.
If they did the effect would be most marked.   There would be an increase
in dividends instead of a steady decline.   (Applause.)
    There are several companies which have refused to be carried away
with the pursuit for bigness, but have been annually renewing themselves
and making moderate gains in volume of insurance in force, where the
actual mortality to the expected is more favorable than in the expensively
managed ones; and these companies afford the best possible demonstration
that high-pressure methods do not, in the long run, justify themselves, for
such companies furnish each year insurance at a much lower cost than
those which fail to have a due regard for the individual right of members.
   The matter of dividends which, as first said, to a degree controls cost,
is largely a matter of management; and results so far sustain and approve
those who realize the obligation of stewardship, who appreciate the sacred-
ness of the trust-relationship which they occupy, and who will not for a
moment consent to the robbing of Peter to pay Paul, reserving the right
to later pluck Paul for other generations of Peters, who, in turn, will have
the same treatment. With confidence it is stated, that management is best
which will carefully guard the right of the individual, permitting no wrong
to him for the benefit of the mass, taking nothing from the mass for the
advantage of the individual. Such a doctrine, let us hope, shall be the
guiding star of the institution whose birth we commemorate, and so make
it continuously worthy of the illustrious name it bears.    (Applause.)
    Mr. SIMON WOLF. Mr. Chairman, in moving a vote of
thanks to our friend, Mr. Lippincott, I think I voice the sentiment
of one and all present, and indeed of every policyholder in the
52             SEMI-CENTENNIAL CELEBRATION
Penn, when I say that the paper he has read is not only admirable
in tone, elegant in diction but fruitful for the future, I have no
doubt, of results that will be of great benefit to the company, to the
insured and, last though not least, to the agents.
    The Penn has been in a state of evolution; and the best evi-
dence of it is that the Manager of Agencies is so closely in touch
with all the intricacies that underlie this business, especially in his
keen knowledge of the one end, aim and object of the agents—
who, after all, are the primal factors in the success of the insurance
business, and therefore of the Penn Mutual. I therefore move
you that the thanks of this Convention be tendered to Mr. Lip-
pincott for his able paper. (Applause.)
    The CHAIRMAN. The Chair takes pleasure in seconding that
motion.
    Mr. A. A. WALKER. I suggest that we evidence our respect
for the Manager of Agencies by a rising vote on the motion.
    The CHAIRMAN. (After a whispered suggestion by Mr. Lip-
pincott.) The Manager of Agencies has suggested that Mr. Ire-
dell should be included in the vote of thanks.   (Applause.)   If that
be the pleasure of the delegates, the motion will be to tender a
vote of thanks to Mr. Iredell and Mr. Lippincott, taking them in
the order in which their papers were presented.
    The Chair here took a vote upon the motion, when all the
delegates rose in the affirmative.
    During the taking of the vote Mr. Lippincott rose, but hur-
riedly resumed his seat with the remark, "Oh, I am in the nega-
tive." A burst of merriment followed, during which he added:
"It has been suggested that I rise, with all the others, to empha-'
size my appreciation of Mr. Iredell's paper. I vote for that half of
the resolution." (Renewed merriment.)
    Mr. IREDELL (who had already voted) remarked: I had pre-
viously done that for Mr. Lippincott.
    The CHAIRMAN announced that the vote on the motion of
thanks was unanimous. He then announced the details of the
arrangements for the boat ride on the Delaware in the afternoon,
and followed this with the announcement that the meeting was
open for general discussion.
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     53
    Mr. JESSE J. BARKER (responding to calls, accompanied by
requests to take the platform) came forward and after taking a
position alongside the Chairman, said: Gentlemen, I don't think
it is necessary to take the platform to disclaim any intention of
"taking a photograph" this afternoon. I am not the guilty party
this time.   (Merriment.)
    Mr. C. HALL humorously suggested that a vote of thanks be
tendered to Mr. Barker for his beautiful speech.   (Continued
merriment.)
    Mr. GOULDEN. I presume that it may be in order to explain
whv the suggestion is made to tender thanks to Mr. Barker. It is
not for the speech, I take it, but it is because he has agreed not to
shoot his camera upon this occasion, as he did, in July last, at the
Thousand Islands. Those who were not present last year don't
know the joke connected with this matter. Our friend, Mr.
Barker, always alive to the interests of the company and to the
pleasures of the agents, had his camera with him on that occasion,
and he was loaded for everv emergency.
   The CHAIRMAN. You mean his camera was "loaded."
    Mr. GOULDEN. It appears, Mr. Chairman, that the boys
know Mr. Barker as well as I do; hence they will understand that
it was the camera, not the gentleman himself, who was in that con-
dition. It was a very common thing for Mr. Barker, at the Thou-
sand Islands, upon every occasion, to say, "Boys, look pleasant,
smile now," and immediately operate his camera. This he did so
frequently that all those present on that occasion constantly ex-
pected to hear the genial voice of Mr. Barker saying "Smile now,
look pleasant." Hence the necessity tor a vote of thanks upon
this occasion, when he has agreed not to shoot his camera as he
did then.
    The CHAIRMAN. The meeting is now open for a general
discussion of the papers that have been read' or of any other sub-
jects that mav be pertinent which gentlemen desire to introduce.
I do not desire to follow the example of your Chairman on yester-
dav (with which he expressed his dissatisfaction) in calling upon
individuals. I prefer that those who feel impelled to speak should
rise and do so without being called upon.
54             SEMI-CENTENNIAL CELEBRATION
    Mr. G. A. WATKINS. Mr. Chairman, I desire to ask a ques-
tion about the time for getting- something to eat to-morrow even-
ing.   I notice that the time for the banquet at the Union League
is not noted on the program, and I am afraid I might miss it if I
did not know the time appointed for it.
    Secretary LIPPINCOTT. The hour is 6 o'clock.
    Mr. WATKINS. Thank you.
    Mr. LIPPINCOTT. While I am on the floor let me say this also,
with the permission of the Chair: I understand that some of our
visiting guests came away from home without their dress suits,
and one or two have expressed some apprehension that if thev
attended the banquet in any other than a dress suit they would be
tabooed. Gentlemen, let me say for the information of all that
about one-third of the guests on that occasion will not appear in
dress suits, so that there will be no discrimination in that regard,
nobody will be marked for it, and let nobody stay away for that
reason. (Applause.)
    Mr. NOAH H. PLYMPTON, who was about retiring from the
hall at this point, was good naturedly seized by friends and reluc-
tatly compelled to accompany them to the platform, all the dele-
gates meanwhile joining in a chorus of calls for a speech. He
responded:
    Gentlemen, this is a most unfair advantage and perhaps a little
out of order. My case is a good deal like that of a delegate to a
convention in Massachusetts in 1878. There was a row in the
party (there is always a row in our party—the Democracy), and we,
of the majority, had reason to believe we wouldn't get into the
convention hall. So in the still hours of the early morning we went
in and -took possession. We were -holding a mock convention,
when all at once, in a remote corner of the hall, a Milesian brother
got up and said, "Mr. Chairman, I rise to a point of order." The
Chairman said, "State your point of order." Our brother then
stated, "Mr. Chairman, I have a call of nature and I would like to
know what to do with it." A delegate in another corner of the
hall arose and said, very solemnly, "Mr. Chairman, I move that it
be laid upon the table."
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     55
   (In the uproar of merriment which here followed, Mr. Plymp-
ton disappeared.)
    Mr. A. A. WALKER (being called upon by the Chair), re-
sponded: Mr. Chairman, haven't you another agent here of that
name? I am sure there is some mistake.
    (Here the calls to take the platform were continued so per-
sistently that the speaker was obliged to pause.)
    I am overwhelmed just at this time, as I have iust now re-
ceived a telegram stating that there is $5000 of new insurance
coming from my agency. I therefore don't feel like talking. In
looking over the list of eminent speakers on the program, before I
left home, I concluded that I would not be called upon, and hence
did not prepare any speech. Otherwise I might have written one,
or might have got an agent of the New York Life to write one for
me.
    However, I will say to you, gentlemen of this august Conven-
tion, that Alabama greets you and especially the Penn Mutual Life
Insurance Company in its great management. When the Penn
Mutual came South, to Alabama, it didn't come with two distinct
classes, a Northern and a Southern class, but it gave the citizens of
Alabama the same rate; it had the same rate for a Georgian or an
Alabamian that it had for a Pennsylvanian. It came down there
with the same old table of rates, and the people adopted the Penn
Mutual. Last month Alabama was about the fifth, in the list of
States, in its contributions of new business to the Penn Mutual.
While we hardly expected to make it the first, in point of business,
we did expect to get farther forward on the line than fifth, and we
hope now to be nearer the top than we now are before the first of
next January—I mean in your monthly reports. The company is
immensely popular in Alabama now. For three or four years I
worked hard for the Penn Mutual, succeeded in convincing people
that they ought to insure their lives, and they did so—in the New
York companies. (Merriment.) When I argued with them, they
retorted, "We would like to insure with you, in the Penn Mutual,
but everything goes to New York, we can take ordinary securi-
ties to New York and borrow money on them; if we want to bor-
row in Philadelphia, we must carry a 'gold brick,' and they will bore
56

SEMI-CENTENNIAL CELEBRATION

through it to see whether it is gold." (General merriment.) But,
gentlemen, we greet you with words of good cheer. We are here
to tell you that the Penn Mutual has a future in Alabama and in
the South.
    I might say something on other lines, but I. prefer not to do
so now. My friend, Colonel Goulden, over there, is spoiling for a
speech. He is one'of the best talkers that I know, wherever you
strike him. So that, after this informal little pleasantry, I call on
Colonel Goulden to represent us.
    (Calls for "Goulden" here resounded from all parts of the
hall.)
    Mr. J. A. GOVLDEN, General Agent at New York, here rose
and endeavored to speak, but was interrupted by the usual call to
take the platform. He declined, however, to come forward, and
when several gentlemen attempted to escort him from his seat,
amused the delegates by exclaiming "Save me from my friends."
    The CHAIRMAN. We .have just heard from the "gold brick"
of Alabama; now we will hear from "Jerusalem the Golden" of
New York. (Laughter.)
    Colonel GOL-LDEN finally said: Mr. Chairman, I think vou
made a mistake, a few moments ago, when you intimated that vou
would expect those whom "the spirit moved" to speak upon this
occasion; and I don't often have an opportunity of calling vour at-
tention to mistakes. You evidently feel the spirit which should per-
vade this occasion, the Golden Jubilee of the Penn Mutual Life
Insurance Company, and therefore you imagined that this should
be a Quaker meeting. While the Quakers are frequently moved
by the spirit, I very much fear that you have erred, as a great ma-
jority of the representatives here, while admiring the Quakers and
the spirit that brought into existence this company, are not them-
selves of that persuasion, and therefore you will be disappointed if
you wait until the spirit moves them.
    I am sorry that our friend from Alabama (Mr. W^alker) has
put me in the position in which I find myself, but he has done that
because he wants us to shake hands over the bloody chasm. He
wore the gray during the war and I the blue, but when I had the
honor of appointing the Captain as an agent in Alabama, we
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     57
agreed to bury all past differences not only in the interest of the
old flag which we all honor and cherish but in honor of the com-
pany that we now represent, and he has been a good representative
in that State for many years. I have no doubt that when he tells
you, Mr. Chairman, that he is going to put the Penn Mutual
among the leading agencies of the country, in the matter of new
business, and away up on the list of agencies, he will not fail to do
so.   I never caught Captain Walker telling a lie, though they say
he does it occasionally when he is in competition with the New
York companies; they say he will tell a pretty good-sized yarn
under those circumstances. (Merriment.) Now, whether that is
true or not I will leave you to judge, as you will learn to know him
as well as I do.
    I have been much impressed by the papers we have heard
read this morning, as I would have been by those read yesterday
if I had been here.    It was my loss as well as my misfortune to
have been denied that pleasure on yesterday.
    I made a few notes while the gentlemen were reading their
papers. The gist of the first paper, so far as I discerned, was this,
how we could retain membership in this company—how we could
retain the policyholders we had managed to secure in spite of the
desperate and very serious competition in which we have all been
engaged? That is a very serious question; and if I was able to
solve it satisfactorily I should not be in the employ of the Penn
Mutual nor of any other life insurance company, for the secret
would be worth millions of dollars.
    Now if you will search the records you will find that the
largest percentage of lapse is found in those companies doing
what is termed "a high-pressure business." Men are induced to
insure under the fair but delusive promises of agents as well as by
the reprehensible system in vogue of rebating. I think that that
is very clear to all of us because we know that men are pressed
into life insurance under promises of all'kinds and under a rebate
ranging anywhere from 25 to 90 per cent. I know of scores of
men who have insured their lives for large amounts with no inten-
tion of continuing the policy beyond the first year. I w^ant to say
that that practice does not exist in the Penn Mutual for the very
58

SEMI-CENTENNIAL CELEBRATION

good reason that you are not able'to compete with the large com-
panies in the matter of commissions. Hence it seems to me that,
if something is done or an attempt made to bring all the com-
panies together, particularly the larger ones, into a compact to
which they would not only subscribe but would faithfully carry out,
the remedy would be speedily applied to this crying evil in life
insurance. When I say "the larger companies," I ought to be
specific and say the three large ones. If they are to be brought
into a contract such as they have subscribed to to-day, absolutely
forbidding rebates, and that contract be kept inviolate, I believe
you would discover a means of increasing the duration and age of
policies in the various life insurance companies to a very large
degree and would solve the problem of expenses and management.
Men are pressed into service as policyholders, under these rebates,
for large amounts and for much larger amounts than they are able
to carry, and the consequence is that a very large percentage
lapse within the second, third or fourth year. The question of how
to retain the members of a life insurance company is certainly a
great one. It costs a great deal to get them, and there ought to
be some system adopted by the various companies, looking to that
end. But there must be united action, Mr. Chairman, on the part
of the companies if you desire to accomplish this much needed
reform.
   Another thought given out by Mr. Iredell is the question of
under-average or sub-standard lives. There is a tendency in that
direction on the part of life underwriters, of which you are all
aware. The New York Life Insurance Company have inaugu-
rated a sub-standard department, which is now being carried into
effect.   They have gathered the statistics, in England and else-
where, for a number of years. Mr. McCall claims that they have
locked up in their safes data sufficient to jusify the New York
Life in establishing this branch of life underwriting; and they pro-
pose to carry it into execution. They hesitated about it at first on
account of the feeling in life insurance circles that the issuing of a
policy to second class or under-average risks was not commend-
able nor praiseworthy, and that it would not meet with popular
favor on the part of those who could pass the requisite test for a
policy on the old well-established companies.
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     59
    But the day is not far distant, in my judgment, when all the
companies, including- the Penn Mutual, will be willing to write a
sub-standard risk free from organic disease, at an adequate pre-
mium, thus insuring the better class of sub-standard or impaired
lives.
    In an experience covering thirty years of my life I have
watched carefully those sub-standard risks and to-day I could
name a number of them who were rejected twenty-five or more
years ago, who are now living and well, while many of those who
passed first muster and were considered first-class in their physical
conditions have died from organic disease long since. (Ap-
plause.) This may seem strange that twenty-five years ago the
Penn Mutual declined to write a policy on my life because of
overweight, my weight then being, as it is now, 200 pounds, with
a height of five feet, seven and a-half inches. Dr. Page, then
Medical Director of the company, declined to write my application
for no other reason than that I failed in the standard of height
and weight, which at best is but an arbitrary rule of the medical
directors of the various companies. I was obliged, in order to
secure a policy in the Penn Mutual, to personally visit the home
office and submit to an examination, severe in character, at the
hands of the Medical Director and his assistant, Dr. Keating.
After mature deliberation on their part, they decided that inasmuch
as my life was an active one it would be safe to issue a limit of
Sio,ooo, which was done. But before this conclusion was arrived
at I was obliged to go through the paces of various kinds, jump
over all sorts of things in order to satisfy the distinguished medi-
cal gentlemen that I was what the local examiner claimed, "a first-
class, healthy risk."
    I believe that that subject should receive the attention of our
officers and trustees with a view of arriving at some satisfactory
conclusion of this vexed question and instituting a needed reform
in this direction.   There is no reason it could not be safely done,
providing the company will charge a rate commensurate with the
risk assumed. If a company like the New York Life or the Penn
Mutual cannot do it, how can you expect other companies that
are doing exclusively a sub-standard business to do it successfully?
6o .           SEMI-CENTENNIAL CELEBRATION
    Now, with reference to the paper read by our friend, Mr.
Lippincott—I should say "the Judge," for by such title lie is best
known to the agency force of the company—I will not compli-
ment him (because he would say it was blarney) beyond saying
that it was a most admirable, well digested and ably-written paper,
one worthy of the careful study and consideration of every one
connected with life insurance interests. We have now a fragment
of the "blarney stone" on exhibition at the Irish Fair, in New
York City; and I cannot therefore speak more at length on the
value of this paper, else he would charge me with having kissed
that stone before coming to this meeting. The paper read by
Mr. Lippincott has thrown out some original ideas that commend
themselves to every lover of life insurance and particularly to those
interested, as we are, in the success of the Penn Mutual Life
Insurance Company, and I hope that it will find fruitful soil among
the Trustees and officers of the company.
    I want to say, in connection with this, that during twenty
years' experience with the Penn Mutual I have never yet known
our Trustees to throw aside or fail to give the proper attention and
consideration to suggestions emanating from any one connected
with the company. I know of no board of trustees of any life
insurance company who are so thoroughly in sympathy with the
objects sought to be attained in life insurance and with the sug-
gestions made by agents and policyholders of the Penn Mutual as
that of the Penn Mutual Life Insurance Company. (Applause.)
And I may include in that the officers of the Penn Mutual. I do
that without desiring to flatter them. Living, as I do, in New
York City, I am more or less familiar with the management of the
various companies finding a home there. It is about as difficult
to obtain an audience with or have a suggestion or recommenda-
tion considered by those gentlemen as it is to reach the President of
the United States or have him give consideration to a suggestion
made bv a citizen of the 'country. This, I am proud to say, is not
the case with our company. The humblest policyholder or agent
can always obtain, at the hands of the management of this com-
pany, due and careful consideration of any suggestion or recom-
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     6l
Tnendation made by him. They are always in touch and sympathy
with both policyholders and agents and sre therefore to be
specially commended at our hands.
    Now, a very valuable suggestion was thrown out by Mr. Lip-
pincott, the head of the Agency Department, with regard to the
matter of expenses in new business; that being the onlv factor
absolutely within the control of the management. .We, as agents
and fieldmen, can do much towards aiding the company in their
efforts to increase the dividends to policyholders by curtailment
of the small and incidental expenses of our respective agencies.
While individual items may amount to but little, yet in the aggre-
gate they amount to thousands of dollars annually. There is no
doubt that the question enters very largely into the success or
failure of life insurance companies.   You have got to meet this
question as to the cost of life insurance; and, while I am neither a
prophet nor the son of a prophet, I venture to say the day is not
far distant when you will be called upon to sell largely annual divi-
dend policies. Men come in to me and say, "I want nothing but an
annual dividend policy, one in which the distribution of surplus
takes place yearly; I have no desire to wait for ten, fifteen or
twenty vears for something that, in the event of my death or by
taking a paid-up policy, will inure to the benefit of others or per-
haps of the company in securing new business." These people
sav, "I don't wisli to insure my life for speculative purposes but I
want insurance for the sake of the protection alone." The New
York Life Insurance Company have just formulated a new annual
dividend contract which they purpose pushing to the front. While
they claim, in their circular of instruction to agents, that the semi-
Tontine policies are the best that there are, yet there is a growing
demand on the part of the insuring public for something of the
character which I have just outlined, viz: insurance for insurance
sake. John A. McCall was always in the'van of reforms and in
feeling the public pulse, and it is due to him to say that he has not
made a mistake in this case. I think Mr. Lippincott struck the
key-note on that subject of annual dividend policies, and that he
very aptly states that it is impossible to predict the actual cost of
62             SEMI-CENTENNIAL CELEBRATION
insurance in the future as well as to give any definite figure as to
the distribution of the surplus in the shape of dividends annually.
And yet, with the proper and conservative management which has
always been given us by those in charge of the PennMutual, there
is no reason why a good dividend should not be paid in the future
by this company as is the case now.
    But, Mr. Chairman, when you talk about curtailing expenses,
especially in the direction of cutting down commissions, then there
is a kick all along the line.   The fieldmen do not object to a cur-
tailment of home office expenses. But, seriously speaking, I be-
lieve that there could be some economy practiced by the managers
of the various life insurance companies in directions in which it
would not seriously affect either the officers of the company or the
agents doing work in the field. We don't think we are getting too
much now.
    The annual dividend policy is one that, I think, will become
more popular from year to year, as was the case twenty or twenty-
five years ago.   While many of our friends think that Col. Jacob
L. Greene, of the Connecticut Mutual, is a little off his base in
reference to this subject, I really think that Colonel Greene has car-
ried out the true policy in issuing only regular yearly distribution
policies; and I think the agents of the company will appreciate the
fact and vote with the Trustees to assist in keeping down expenses,
wherever it can possibly be done, in order that our company's
reputation as a dividend payer may be maintained. As to the
question of dividends, it does not enter into the matter of insur-
ance as it did twenty years ago, but the insuring public are gradu-
ally approaching that point when the same condition will exist and
when the question will be asked, and a candid answer expected,
"What dividends are the company likely to pay during the next
ten, fifteen, or twenty years?"
    Mr. Chairman, I think the agents are to be congratulated
to-day upon having heard two such excellent papers; that the
papers will be productive of good results in increasing the efforts
of the agents in their respective fields when this pleasant occasion
has ended, and will prove of great benefit to the company as well
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     63
as to the material prosperity of the field workers in the future.
(Long continued applause.)
    Mr. WALKER. Mr. Chairman, did I understand the gentle-
man (Mr. Goulden) to say that there is any danger of the com-
panies stopping the issuing of dividend paying policies?
    The CHAIRMAN. Not at all.
    Mr. WALKER. I thought that the gentleman suggested the
fear that the company was going to stop.
    I want to ask the gentleman another question, viz: whether
the system of rebates prevails in New York, with those New York
companies?
    Mr. GOULDEN. Mr. Chairman, I am sorry to answer yes,
Just as badly as ever, notwithstanding the compact entered into by
the Presidents of the various life insurance companies.
    Mr. WALKER. That has been violated then?
    Mr. GOULDEN. I may say, if the gentleman will pardon me,
that I lost a $30,000 risk which I had issued, last December, be-
cause I couldn't give the man ninety-five per cent. rebate.
(Laughter.) I reported the case to the company and asked them,
if possible, to ascertain the name of the agent, stating that if the
name was ascertained I would prosecute him. I couldn't get the
name of the agent. He was of the Mutual Life Insurance Com-
pany of New York.
    Mr. J. J. BARKER. Mr. Chairman and gentlemen, the impres-
sion seems to be entertained, on the part of some, from Mr. Goul-
den's remarks, that the New York Life has recently adopted an
annual dividend paying policy and that the Penn Mutual did not
issue that kind of a policy. I want to reaffirm that the Penn is
still at the old stand and is issuing all the old forms as well as all
that is desirable in the new .ones. (Applause.)
    The CHAIRMAN. (Humorously.) It seems to be as hard to
keep insurance companies in line in the matter of rebates as
railroad companies.   But Mr. Walker was right when he
said that Mr. Goulden was boiling over for a speech. (Merri-
ment.) I think we will have to reverse the aphorism that "Speech
is silver and silence is golden," for the gentleman (Mr. Goulden)
has given us a "golden" speech. (Applause.)
64

SEMI-CENTENNIAL CELEBRATION

    The Secretary has placed in my hands something which he
thinks will interest you—an editorial from the Philadelphia Record
of this date. I ask the Secretary to read it for the information of
the Convention.
    Secretary LIPPINCOTT. Mr. Chairman, perhaps I should pre-
face the reading by calling attention to the fact that this semi-
centennial celebration has demanded and is receiving widespread
notice in the city of Philadelphia. Means were taken to that end.
We hardly expected however to attract so much notice; we did
not anticipate that a journal like the Record would regard our cele-
bration as of sufficient moment to warrant it in saying what it has
said in its issue of this date. I read from-its editorial columns:
   The Penn Mutual Lite Insurance Company, of this city, has given a
useful object lesson to the country in-celebrating its semi-centenary by a
convention of delegates, representing its branch agencies in thirty-nine
States of the Union. A more instructive demonstration of the vast rami-
fications of Philadelphia enterprise and of Philadelphia business methods
has never been given to the country; and it may as truly be said that the
country has never had a clearer proof that life insurance is one of the most
potent of the beneficent institutions which tend to promote the feeling of
National unity and community. These are among the obvious moral gains
of this novel celebration, the holding of which will also be a reminder to
the country that the city founded by Penn has become, in no narrow sense,
the life insurance capital, and the center from which radiate all the material
advantages which inure to society from prudent and progressive insurance
methods."
    The CHAIRMAN. The Chair thinks we may hear with profit
from Colonel Fell, of New Orleans.
    Mr. JOHN R. FELL, after a cordial greeting, replied: I came
here quite unwell, this morning, and it you will kindly excuse me
for the moment I will be under many obligations. At some other
time I will venture to engage your attention.
    Mr. GEORGE FRENCH. Mr. Chairman, in the line of thought
which has been presented to us in regard to annual distribution of
dividends or surplus, and in connection with which some of the
gentlemen here expressed themselves, yesterday, in regard to
issuing a policy on the stock rate plan or a non-participating pol-
icy I wish to say a word. I hold that the term "stock rate" has
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     65
no place in the Penn Mutual Life, but that we should use the term
"non-participating." What have we, in our present policy, which
shows to the public that it is a participating policy? I fear that
when I arrive at home I shall be compelled to return a policy
because there is not expressed in the contract that the policy shall
participate in an annual distribution of dividends. Now, I would
recommend or desire that, in our ordinary life, in our twenty-pay-
ment life and in our endowment (regular) policies there should be
embodied something to show to the policyholder that the policy
shall participate in yearly distribution of dividends or surplus.   I
take a policy to a customer and express to him my pleasure that
the company has seen fit to issue to him a policy. He scrutinizes
the policy and fails to find in it anything regarding the dividends
to which I have referred and which he may use in the annual re-
duction of his premium. He tells me, "I have not time to talk
to you now but I wish you would go to my attorney and give him
a note from me." He gives me a note in which the inquiry is made
whether in the opinion of his attorney, it is safe for him to take that
policy in expectation of having the premium reduced by dividends.
When I deliver the note, the attorney scrutinizes the policy and
fails to find in the contract anything that assures the insured that
his policy is participative. Then I turn to the answer in the appli-
cation, but I am met with the rebuke that that application is not
the company's contract and therefore is not binding on the com-
pany.
    I hope that these suggestions will be recognized, and that
there will be embodied in the policy, as there is in many other
policies, a statement of the fact that it is participating and will
receive annually its share of distribution or surplus.
    A delegate here handed to Mr. French a policy and added:
Will the gentleman read what is on the top of that policy?
    Mr. FRENCH. This policy has been handed to me with the
request that I read the following: "This policy will be entitled to
a dividend upon the payment of the third annual premium, and
thereafter upon the payment of each annual premium." It is not
a Penn Mutual policy.
     5
66             SEMI-CENTENNIAL CELEBRATION
    Mr. IREDELL. Is that signed by an officer of the company
or is it merely a memorandum?
    Mr. FRENCH. It is printed on the face of the paper. But I
simply rose to say that I would like to see in all policies, some-
where in the body of the contract, a clause like that which I have
indicated.
    Mr. IREDELL. Does not the application of the Penn Mutual
ask the question, how is the surplus to be used? and is not the
application a part of the contract? Do you not have to take the
policy and the application together? I think there is a very good
reason why the company cannot insert the clause to which the
gentleman refers. I have never had any trouble in convincing a
person that the dividends could be used annually. We have a
record of fifty years, showing that we never failed to pay an annual
dividend. (Applause.)
    The CHAIRMAN. The point taken by Mr. French, the Chair
thinks, is a good one. (Applause.) The matter ought to be
referred to the Committee on Policies—no doubt it will be.
    Mr. WATKINS. If the Penn Mutual have for forty years paid
dividends and expect to pay them for forty years more, why are
they afraid to say so in their policies?
    The CHAIRMAN. The Chair does not think they are afraid.
(Applause.)
    The Chair thinks that we would now hear with much pleasure
and profit from Col. Ezra DeForrest.
    Col. EZRA DEFORREST, of New York, who was cordially
greeted, responded: Mr. Chairman, modesty seems to be my only
virtue. (Merriment.) Perhaps it was because of this fact that the
Penn Mutual, wanting to have a live agent in New York City, put
one there who was always calling upon the "Colonel of the Gal-
lant Twenty-third." (Renewed merriment.)
    Seriously speaking, I can only say that I have listened with
great pleasure to the various papers read here yesterday and to-
day, and have profited by them. I regret that in my own agency
in New York, the blossoms have been so few, but I hope that the
influence of the valuable papers to which we have listened will
bear fruit there in hundreds of thousands of dollars of new insur-
         THE PENN MUTUAL LIFE INSURANCE COMPANY.     67
ance business. I thank the Chair for calling upon me, but beg
to be excused from making any extended remarks. (Applause.)
     The CHAIRMAN. If any other gentleman would like to be
called upon, the Chair wishes he would announce the fact.
     Col. DF.FORREST. Mr. Chairman, if the last remark of the
Chair can be construed into an intimation that I had wished to be
called upon, I would like to have it understood that that is an
error. The call upon me was entirely unexpected. (Merriment
and applause.)
    The CHAIRMAN. The Chair desires to present at this time the
oldest Trustee of the Penn Mutual—Mr. James 0. Pease—who has.
just entered the hall. This gentleman is the oldest Trustee in the
service of the company.
    (Mr. James 0. Pease here came forward and was escorted by
several delegates to a seat on the platform, adjoining that of his
veteran associate, Mr. Compton, the Convention meanwhile rising
and complimenting the gentleman with a series of cheers.)
    The CHAIRMAN. Gentlemen, you now have with you two of
the "i847's."
    Mr. PEASE here said: Mr. Chairman and gentlemen, I am
overwhelmed by this reception. I never received such a one
before, and never expect to have another like it. I thank you.
(Here the cheering was renewed, after which the regular order of
business was resumed.)
    The CHAIRMAN. We have not quite exhausted our list of
military representatives. Capt. J. S. Land comes next on the list.
The Chair calls on the Captain to respond.
    Capt. J. S. LAND replied: Mr. Chairman, I beg to be ex-
cused. I am not gifted in the way of making speeches. I prefer
to leave that to some of the older agents, who have had more
experience in that specialty. I will have to leave you call upon
them.
    The CHAIRMAN. Still the list is not exhausted. We have
with us Captain Kendall, upon whom the Chair now calls.
    Capt. F. A. KENDALL, of Cleveland, 0., yielding to solicita-
tions, came forward to the space in front of the platform, and said:
Mr. Chairman and gentlemen: I am delighted that Brother French
68             SEMI-CENTENNIAL CELEBRATION
brought up this matter that our policies do not contain a clause
agreeing to permit the policies to participate in the annual distri-
bution of surplus. Having at one time read law and come in con-
tact with many members of the legal profession, I can say that
that matter is a source of complaint with them when they critically
examine our contracts. I have observed some old contracts of
this company, of twenty or twenty-five years ago, wherein that
clause was inserted. I had supposed that it had been eliminated
from the contract for some good reason; that there was a com-
pact among the companies, years ago, to do that, but for what
reason I know not. I supposed so from the fact that the grand
old Mutual Benefit Life Insurance Company has not had that
agreement in their contract until within the last three years, I am
so informed. As our policy lines up pretty closely with theirs, I
cannot see what harm there may be in placing in our contract a
clause to this effect, "This policy while in force will participate
annually in the company's distribution of surplus." There is no
contract if you do not make any. That would have this effect, that
after two years it would be incontestable except for non-payment
of premium. I presume there is some good reason why that
clause is not incorporated in our own policy. I suggest that the
matter ought to be referred to the executive force of the company,
and possibly in that way we may have an explanation in regard to
it.   I make this suggestion because legal gentlemen, who have
carefully scrutinized our contracts, have said that they did not see
anywhere in those contracts any agreement whatsoever for a dis-
tribution of surplus.
    I have nothing further to say. I regret to add that I went to
bed late last night, and my circulation isn't up yet, as I didn't have
time to take my morning exercise.
    The CHAIRMAN. You haven't taken a "bracer" then?
     Mr. KENDALL. I am too old a chicken to take "a bracer"
before breakfast. (General merriment.)
     I have been astounded to see this muster of representatives of
our company. A little bunch of fifteen or twenty of us have been
meeting every year and sometimes twice a year, and I had almost
come to think that we constituted the entire force of the Penn

70             SEMI-CENTENNIAL CELEBRATION
agent is to be congratulated, who is the recipient of the confidence
of a company like the Penn. Mutual. (Applause.)
    On an occasion like this (and I will say that I am not one of
the regular speakers to answer any toast, and therefore I have to
get even with somebody)—on an occasion like this, the golden
opportunity, when we have two of the founders with us, it seems
to me to be a very fitting occasion for saying a word in regard to
the character and standing of the company.
    (Addressing Messrs. Compton and Pease:) I congratulate
you, gentlemen, upon having had the distinguished honor of aid-
ing in the founding of this beneficent organization; and I believe
that what the company now enjoys in character, in distinction, in
recognition, is based entirely upon the good old Pennsylvania
stock—upon Quaker integrity. (Applause.)
    (To the Convention:) I think you, gentlemen, have every
reason to feel proud arid grateful for the fact that the Penn Mutual,
as far as I know, has never been the subject of any investigation
by a political body or legislature, which is always alive to the dol-
lars and cents, especially where corporations are concerned. In
connection with this, it is a well-known fact that some of the
largest insurance companies of this country have to have a reserve
fund (and do have it) in constant fear and dread of being black-
mailed by gentlemen who come from the District of Buncombe.
The Penn has fortunately escaped that—and why? Because its
dealings are lair, square, open and based upon that for which it was
created. In that particular I think, on this Golden Jubilee, we have
every reason to feel most grateful, not only as policyholders and
agents, but as citizens of the United States; for when an organiza-
tion of this character does exist and does enjoy the confidence and
esteem of its fellow-citizens, it is part and parcel of the great his-
tory of our country. Everything of this character enters into that
history; and whatever enters into National prosperity of course
makes part of the National history. I think that the record of this
company forms a bright and shining page in the history of Phila-
delphia, and of this State and Nation. (Applause.)
    Now, one of the gentlemen here said something about medical
examination. I am well aware, by reading and by observation,
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     /I
that no science has made such slow progress as the medical. Sur-
gery has made a wonderful stride, but medicine has taken an anes-
thetic, which has not only put the patient asleep, but has put itself
and its evolution asleep. Now, certain guaranteed, fixed rules
are made for the examination of risks that are absolutely inapplica-
ble upon the basis of common sense. (Laughter.)   I have in the
city of Washington, to-day, an intimate personal friend whom I
brought here to the Penn Mutual to be examined, fifteen years ago,
and I have the letters of the medical department, and a personal
letter from one of the officers of the Penn, stating that my dear
friend would not live six weeks. He is living' to-day and is the
father of eight children. While, on the other hand, a gentleman
who was accepted at that time died within six weeks thereafter.
(General good humor.) So that absolutely no fixed rule can
apply. There are undoubtedly certain fundamental rules in regard
to a man's pulse, temperature and other matters that enter into the
Royal Arcana of medical jurisprudence; they are made use of as
the foundations. But I claim this, that an agent living in the city
where he was born, where he is esteemed, recognized and honored
(otherwise he would not be an agent of the Penn Mutual), that
when he presents the application of a man, in good faith, his word,
his knowledge, his observations, backed by that of the family
physician (who in many instances is also the examining physician
for the patient), ought to go tor a great deal in the acceptance
of the risk. (Applause.)
    I know how it is in fire insurance. A man fails in business;
he applies for insurance and the commercial agencies give the
fact that the man has failed, and the fire insurance company doesn't
wish to insure the man on account of his having failed. How
ridiculous! There are plenty of men who have never failed whose
word I would not take, and there are men who have been unfor-
tunate, who have failed not through any fault of their own, but by
a combination of circumstances over which they had no control,
and whose moral hazard is first-class; who are high-toned and
honorable, who are known in the community and whose paper is
discounted in banks, although they had failed. Therefore, it is
the moral risk, not the financial risk that is of account. And so
72             SEMI-CENTENNIAL CELEBRATION
it is with life insurance.   These are things to be considered.
Every branch of a company must go hand-in-hand with every
other branch.
    Now, with regard to dividends, I have said a thousand times
that the Penn Mutual is a better company for the insured than for
the agent. That is true, perfectly true, because in the competition
with other -large companies, where fabulous, unnatural, unjust,
illegal and criminal rebates are allowed, we cannot compete. Why,
I had a friend who died here the other day, who had eight policies
in eight years. The last company caught him at last; he died, he
had to die; but he took a policy every year and dropped it at the
end of the year, taking a new policy, and thus was insured eight
years and paid no preminm. It didn't cost him anything to carry
his insurance.   Is that a condition to be tolerated for a moment?
Is not that one of the reasons why some of the companies cannot
pay larger divdends than they do, on account of their enormous
expenses?
    Then, as to the enormous expense of administration, we of the
Penn are fortunate that the Presidents of the Penn Mutual do not
receive royal salaries at the expense of the policyholders. Their
salaries are moderate and in keeping with the aim and object of the
mutual life insurance company, which is a trustee in every sense
for the benefit of those who trust it.
    So that there are many things to be considered, but I did not
get up for, the purpose of boring you. However, I wish to say
with regard to our friend Plympton, when he made use of his lit-
tle illustration (which was rather "loose" in its character, but still
was very apt), I was reminded of an anecdote of a preacher who
said that with God everything was possible; that
       "When He created the mountain. He created the hills;
         When He created the ocean. He created the rills;
        When He created the behemoth, he created the squirrel;
        And when He created Plympton, He created a daisy."
(Long continued applause.)
    Mr. SCHLEY, of Georgia, being here called upon, responded:
Mr. Chairman, I have become a Quaker, the spirit has moved me.
I was called upon yesterday and was a little too tired, but I have
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     73
now a serious thought—it's not often I have one—and I want to
express it. You will remember that after your paper was read
yesterday, a brother called you a "brick." I have been trying- to
think how I could express the same thought, and our brother from
Alabama (Mr. Walker) has given me the expression. I knew you
were "all wool and a yard wide," but I have come to the conclusion
that what the brother meant }^esterday was that you are a "gold
brick," a brick that doesn't have to be bored for anyone to see
whether it is solid. That suggests another serious thought. When
we look on the platform to-day and see upon what a foundation our
company is built—one of "gold bricks," bricks that have stood
the test of years—we recognize that it has a foundation of strength
and security. This means that I am a "gold man," of course, but
I am not from Denver, Colorado. (Laughter.) Taking up Cap-
tain Kendall's expression when referring to the character of our
agents, my thought is that we are all "bricks." As bricks we
occupy a part in the building of the Penn Mutual; and I hope we
may help to build its walls higher and carry out in the next fifty
years the record of the past fifty years. (Great applause.)
   The CHAIRMAN. It is now within fifteen minutes of the time
when the coaches will be here for the ride to the river; and, unless
there is some other business to come before the meeting, the Chair
thinks we might begin to draw to a close.
    Mr. KENDALL. Mr. Chairman, I made a few remarks yes-
terday about the reasons why people used to insure and why they
insure now. There is one thought that comes to me and I was
struck very forcibly by it as the discussion here proceeded, and
that was this: The confidence of the financial institution of the
country in the insurance companies is such that I am at liberty to
say that just so far as our cash values are written in our contracts
and are put upon the country, just so far is the capital of the coun-
try increased. The trust companies have placed insurance poli-
cies as good collateral at their cash values.   Therefore every policy
issued by us, with cash values in it, is like the issuance by the Gov-
ernment of the greenback; it increases the capital of the country
and contributes to the development and industrial enterprise of
the country. An officer of the Cleveland Trust Company recently
74            SEMI-CENTENNIAL CELEBRATION
told me that a provision had been inserted in the charter of that
company, by which it is enabled to hypothecate insurance policies
and make them the basis of larg-e operations, and that is being
done. Wealthy men have used their policies in that way, and the
banks are preferring them as securities because of the prompt-
ness with which they can realize, upon them. When this vast
amount of insurance goes out into the world, as it will in the
course of ten years, we will not hear anything about there not
being money enough to do the business of the country. Having
as a basis the confidence that the financial institutions of this land
have in our great insurance companies, these insurance values can
be put forth and made available whenever necessary. They will
thus be the means of fostering prosperity in every form.
    Mr. JOHN J. MCCLOY was next called upon and was greeted
with applause. He said: Mr. Chairman, I don't like to see the
meeting adjourn without something being said from the Home
Office standpoint on the papers that have been read. I mean to
say, sir, that the Home Office has a keen sympathy with that class
of citizens whose knock we are compelled to leave unanswered,
and in whose expectant face we so often close the door, but
who, I may be permitted to say, nevertheless contribute largely to
the prosperity of our institution. Surely, Mr. Chairman, on the
basis of pins often saving the lives of many people by those people
not swallowing them, so somewhere in life insurance there must
be a place for great gratitude to the declined applicant. We at
the Home Office have seen him under many and varying circum-
stances, sometimes too fat, sometimes too lean; sometimes with
murmurs, soft and low, surging through his laboring heart; some-
times in consumption's wasting grip; sometimes as the victim of
an unfortunate ancestor; too often the victim of his own folly and
indiscretion; but always, gentlemen—it is my pleasure to assure
you—always the object of patient consideration by those of your
company's officers whose duty it too frequently becomes to with-
hold from your applicant the. protection for which he seeks and
from you the reward of your persistent labors.
    I don't know how far it is practicable or reasonable to insure
under-average risks, but this I say, that your company recognizes
        THE PENN MUTUAL LIFE INSURANCE COMPANY.     75
fully and keenly that we ought to extend our operations to include
every one who can safely and reasonably be insured at safe and
reasonable rates. (Applause.)
    Chairman RHAWN (a few minutes before the adjournment)
said: Gentlemen, I do not know that I will have another oppor-
tunity of appearing before you as your presiding officer. I would
like to make one remark, called forth by my observations as Chair-
man of the Committee on Claims. A couple of weeks ago a death
claim to the amount of $25,000 was presented to me for my signa-
ture as Chairman; and, in looking over the numerous papers that
were attached to it, I discovered there were no less than four dif-
ferent signatures purporting to be signatures of the same indi-
vidual. He was the Judge of the Probate Court, I believe, who
had to certify to a certain portion of these papers. I declined to
approve that claim until that matter could be explained. It was
finally explained, but it required a page of foolscap, signed by the
Judge of that Probate Court, over his own proper signature, in
order to make that explanation satisfactory. I merely call atten-
tion to this little matter because it is one that came under my per-
sonal observation. In that instance the policy was for a large
sum, $25,000, and there were no less than four different signatures
purporting to be the signatures of the same individual, but of
course three of them were not his signatures. This is a little inci-
dent that it occurred to me to mention on this occasion.
    Mr. W. W. MACOMBER. Mr. Chairman, before we adjourn,
I 'move, as an expression of the sense of this body, that the thanks
of the Convention be presented to you, sir, for the interesting and
"fruitful" way—if I may use the last adjective—in which you have
presided at this day's session.
    Secretary HENRY C. LIPPINCOTT, in taking the vote on the
motion, suggested that it be made more emphatic by the Conven-
tion rising-.
   The suggestion was instantly acted upon and the Convention
rose en masse in the affirmative. (Applause.)
    Mr. LIPPINCOTT then notified the Chairman that the vote of
thanks had been tendered unanimously.
    Chairman RHAWN. Gentlemen, I thank you for your high
appreciation of my very simple services.
76             SEMI-CENTENNIAL CELEBRATION
   An adjournment was then ordered until the following day at
10 o'clock A.M.
          A BOAT RIDE AND SHAD DINNER.
    The afternoon of the second day (Wednesday) was enjoyed
by the delegates in a steamboat excursion on the Delaware river
and a shad dinner at Washington Park. The guests departed in
a body from Mercantile Library Hall, at 12 o'clock M., and were
conveyed in coaches to the river front. The route had been so
arranged as to afford the visitors a view of Independence Hall and
contiguous buildings and the grave of Benjamin Franklin, also the
historic structure in which the first American flag had been made
by Betsy Ross. On arriving at Arch street wharf the steamer
Sylvan Dell, which had been engaged for the river trip, was placed
at the exclusive service of the participants, with steam up ready to
sustain her record as the swiftest boat on the Delaware. Moorings
were quickly cast off, and with the strong and refreshing south-
west wind, which made the usually placid river something like the
ocean after a storm, the steamer soon brought into view the exten-
sive and interesting works of the Messrs. Cramp, where so many
battleships have been built. Here was viewed the U. S. S. Iowa,
lately constructed, and many lesser craft in various stages of com-
pletion. The intention had been to land and inspect the buildings,
machinery, etc., etc.; as well as the interior of the cruiser, but time
did not suffice. As a seaman would say of a vessel under sail, the
Sylvan Dell "hung in stays" for a few minutes, while curious eyes
were gratified, and then turning southward hastened to the Navy
Yard at League Island, seven miles below the city proper, where
there came into view a fleet of U. S. vessels, including the new
cruiser Columbia, the receiving ship Richmond, and several
monitors distinguished for service during the rebellion, the Ram
Katahdin, the Miantonomoh, Canonicus, Jason, Montauk, Lehigh,
and Nohant being recognized.
    Upon their arrival at Washington Park, the visitors were
photographed in a group, and after an excellent dinner, to which
their sharpened appetites enabled them to do full justice, the party
spent some time in watching the operations of the shad fishery.
When finally the fishermen had made their haul, the return trip
was made and the city was reached before evening.